“Biometric is part of the identity puzzle,” Nimit Gulati told DigFin. Gulati is vice president for authentication and identity services in Asia Pacific at MasterCard – and security measures against fraud are at the heart of how the payments-tech industry is trying to scale across borders.
Payment network providers such as credit-card companies are eager to expand the use of digital payments in their war against cash. Gulati says about half of the company’s card activity now involves digital channels, including mobile, as opposed to facilitating payments with physical plastic. But digital has enabled an explosion in fraud.
“About 50% of activity is digital, but 80% of fraud is digital,” he said.
The industry’s response is biometric cards, such as those enabling signing via fingerprint, or facial recognition at an ATM stand, according to one chip vendor.
Anyone transiting through Singapore’s new Terminal 4 will have experienced facial recognition at immigration – and how it remembers you on subsequent visits. Similar capabilities are being designed for payments, not just to get rid of inconvenient passwords, but to also encrypt data.
MasterCard has introduced fingerprint-enabled cards in South Africa and Bulgaria, and is now eyeing a bigger rollout in Asia Pacific.
But the question is which regulators will welcome these cards.
Gulati says several markets could be the first in the region, particularly those with national digital identity databases, such as India and Singapore, or those with interested regulators, which he says includes Australia and the Philippines.
“Regulators want to ensure there is no bias at the ecosystem level,” he said. That means a balance of power among issuer and acquirer banks, mobile wallets, network operators like MasterCard, and fintechs.
The other concern is to avoid any fraud that puts the payments industry’s reputation at risk.
In addition to lobbying regulators, MasterCard is looking for bank partners that would want to issue biometric cards to consumers. “We hope banks are equally fast to adopt,” Gulati said. This is why a market such India or Singapore, where governments already have digital information on its citizens, would be easiest – or in a developed market, such as Australia, where the quality of existing information about consumers is reliable and consistent.
Biometric is part of a push by the payments industry to bring new tech-based security standards to chips and cards. The advance of QR codes by Ant Financial and Tencent’s WeChat Pay have also spurred industry efforts to require an international standard for QR, one naturally that meets global players’ business models. But there are other reasons for the industry to seek new means of “interoperability”.
3D Secure, used by MasterCard, and Verify by Visa are two security codes whose protocols date to the early 2000s. But the amount of data that chips in cards process has mushroomed since then.
And not just on the chips: payments via mobile bring smartphone data into play. For example, smart handsets come with gyroscopes that measure how individuals hold their devices or sign in, and how they walk. Phones record this and establish patterns that can tell when a phone is being held, accessed or moved by its designated user, or someone else.
This is the kind of data that could be used by payments networks to boost security while pushing their pro-mobile payments business goals.
This is another reason why India seems to fascinate.
Scale to scale
Ari Sarker, MasterCard’s co-president for Asia Pacific, says the “India Stack” promises interoperability, a favorite industry buzzword.
A single, vast open API, the India Stack is meant to combine Aadhaar, a biometric database on every citizen, with electronic know-your-customer capabilities, the United Payments Interface for cashless transactions, and a platform for documents and certificates called DigitalLocker.
“Is this the future for India’s middle classes?” Sarker wondered during a speech at Money 20/20 Asia last month.
For now, market entry strategies are country by country, because of the vast difference in regulations and infrastructure. But MasterCard wants to see the kind of interoperability it might enjoy in India be something it could leverage across borders, otherwise these initiatives won’t scale.
And scale, in the face of Chinese and U.S. internet giants, is the name of the game.