What's Next After EMV Chip Cards?  - person handing EMV credit card to merchant

What's next After EMV chip cards?

Monday, November 24, 2014

If you accept credit card payments at your business, you know the headache fraudulent transactions can cause. And while payment methods like EMV chip-enabled cards and mobile payments have helped to increase security, the industry is constantly improving to protect all parties from card fraud. The next wave of secure payments means an added layer of security for credit card users and small businesses like you.

In this article, we’ll talk about the future of credit cards and the evolution of technology that will allow for even safer and more secure payments at businesses like yours.

What’s a biometric card?

To start, let’s set the current scene for card security. As we know, credit and debit card security is paramount to reduce the instances of card fraud businesses experience. Card companies are constantly evolving technologies in order to make credit and debit card use safer and more secure for consumers. This need for security is what led to the implementation of the EMV chip to protect credit card data. Now, card networks are developing a new payment technology: biometric cards.

Biometric cards utilize the cardholder's fingerprint as another level of security, requiring a biometric match to authenticate the transaction. Essentially, these cards look like EMV chip-enabled cards but also contain a fingerprint scanner. To make a payment, a cardholder inserts or taps the EMV chip card while holding the fingerprint sensor. The electromagnetic connection between the card reader and the credit card activates the fingerprint scanner. Then, the card either shows a green light for a successful fingerprint match or a red light for an unsuccessful fingerprint match. 

As a small business owner, if you accept mobile payments at your business, you’re already familiar with biometric data technology. It’s what provides a second layer of security when customers use their smartphones for payment. Apple iPhones utilize facial or fingerprint recognition while Samsung devices use an iris scan to verify the cardholder’s identity.

While biometric payment cards look like regular cards, they do boast two main differences. The first difference is minimizing the need for a PIN code. Since it uses biometrics to identify the cardholder, the card can be used without a PIN in dipped or contactless payments. A PIN code can be used as a fallback option when fingerprint scanning is unavailable, like at ATM withdrawals. Second, biometric cards currently cost the card networks more to produce than chip cards. With this added cost, it’s possible that card networks may pass it to the consumer. 

Now that you know more about biometric cards, let’s take a look at some of the benefits of using biometric cards.

The benefits of biometric cards

As we’ve discussed, the biggest benefit of biometric cards is security. The fingerprint scanner authenticates the transaction based on who is actually holding the card. Current EMV chip-enabled cards do provide more security than magnetic stripe cards, but if either gets lost or stolen, someone other than the cardholder can use them. Biometric credit cards solve this problem by requiring in-person identification to use. The biometric authentication also eliminates PIN code theft, as you don’t have to enter your PIN code information at the card terminal. 

The second benefit of biometric cards is the ease of use. Because the security features of the card take place right on the physical card, the verification process is faster with biometric cards. The fingerprint sensor is conveniently located where a customer would normally grab a credit card, keeping the payment experience the same for current credit card users.

Biometric cards are also self-charging. They take power from the credit card terminal, so they don’t require an embedded battery or recharging outside of use.

Speaking of credit card terminals, another benefit of biometric cards is that they’re designed to work with current credit card terminals. That means that small businesses like yours won’t have to worry about updating your hardware in order to facilitate biometric card transactions.

The benefits of biometric payment cards help both customers and businesses ensure secure, efficient transactions. Now, let’s talk about fingerprint data.

Is the customer’s data safe?

Implementing biometric authentication leads many to ask: “How’s my fingerprint being stored?” It’s a fair question and one card networks have addressed head-on. According to card networks, the biometric reference data is only stored in the chip on the card. The fingerprint capture process can happen in the comfort of the cardholder’s home. The card comes with a special sleeve that helps a customer “lock in” their fingerprint. This self-enrollment process is crucial to protecting the cardholder’s fingerprint data. When the customer uses their card for the first time, they’ll need to utilize their PIN code to verify their fingerprint. From then on, their fingerprint will serve as payment verification.

How do fingerprint cards affect merchants?

As a merchant, you’re probably wondering how fingerprint cards will affect your business – and most specifically how they’ll affect your POS system or payment terminals. The good news for businesses is that you probably already have the equipment necessary to accept fingerprint cards. Put simply, verification happens on the card itself, so your business doesn’t need any other technology to process these transactions. If your business currently has an EMV chip-enabled card reader, you’re set. 

For merchants like you, fingerprint cards represent greater certainty that a genuine transaction is taking place at your business. With more genuine transactions, you’ll experience less chargebacks at your business and less card declines due to PIN code input errors. Both of these improvements can increase your revenue by helping you to avoid chargeback fees and secure more transactions at your business.

One of the biggest question marks when it comes to biometric cards in the near future is what to do at businesses where customers hand over their cards to the merchant, most notably in places like bars and restaurants. One possible system is utilizing a mobile card reader inside the restaurant and bringing the terminal right to the customer.

Biometric payment cards are coming, but the question is when. Currently, card networks, banks, and security firms are testing biometric cards around the globe. Most notably, Visa has worked with Mountain America Credit Union and Bank of Cyprus in the United States and Europe, respectively. Mastercard also has published information on their biometric card. These pilot programs also rely on partnerships with security companies like Fingerprint Cards, Kona-I, and Gemalto. As the technology proves itself, expect to see the next evolution of card security come to life in the near future.

In this article, we’ve discussed the future of payment cards. Biometric cards are the next evolution and they have benefits for both businesses and consumers. As more thorough testing occurs and card networks find a way to control their costs, expect to see biometric cards come to the mainstream in the next few years.

Looking for a payment processing partner that stays up to date on the latest card technology?

Heartland is the point of sale, payments, and payroll solution of choice for entrepreneurs that need human-centered technology to sell more, keep customers coming back, and spend less time in the back office. Nearly 1,000,000 businesses trust us to guide them through market changes and technology challenges, so they can stay competitive and focus on building remarkable businesses instead of managing the daily grind. Learn more at heartland.us.