European Union regulations coming into place next September will lead to a significant increase in the use of biometric technology to authenticate who is paying, according to Mastercard.

In terms of card payments, currently just 1-2 per cent of online transactions require cardholder authentication to complete a transaction - mostly likely using a password - but this is set to rise to 25 per cent from next autumn.

The EU rules aim to tackle online fraud, by increasing the number of transactions subject to two factors of authentication by the payer, known as Strong Customer Authentication (SCA).

Authentication for online payments and account access will be based on the use of two or more different factors in the future:

• Something you know, such as a password.
• Something you have, such as a phone or card.
• Something you are, such as a fingerprint.

This will mostly impact card payments made over the internet - be it a desktop or mobile purchase - and will also apply to some contactless transactions, as a periodic check to ensure the card is being used by its rightful owner. However, in store chip and pin transactions are already complaint and use two factors.

Although the heightened security measures are designed to protect consumers and businesses from being defrauded, Mastercard is working with banks and the rest of the industry to ensure they are implemented without ‘disrupting’ the convenience of payments for consumers.

Ajay Bhalla, president of global enterprise risk and security at Mastercard, called the use of passwords to authenticate someone “woefully outdated”, with consumers forgetting them and retailers facing abandoned shopping baskets.

“In payments technology this is something we’re closing in on as we move from cash to card, password to thumbprint, and beyond to innovative technologies such as artificial intelligence – it’s far easier to authenticate with a thumbprint or a selfie, and it’s safer too,” he commented.

Mastercard is also testing a next generation biometric payment card, with an in-built fingerprint sensor. The card is being piloted in South Africa and can be used to verify in-store purchases without the need to upgrade existing payment terminals.

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