Wearables will take contactless payments to the next level

We speak to Mastercard and TFL about the future of electronic payments
Biometric payments are a red herring

Contactless payments are all about convenience and, with the risk of fraud minimised by the current £20 transaction limit, it's small wonder that both consumers and the credit industries alike have fallen for the old tap and go in as much time as it takes to open and close the Oyster gates of the London Underground.

But these payments are limited and one of the loudest tuts you'll here in the supermarket is when a customer realises that they can't just slap their plastic up against the machine and walk away before it's even had time to spit out the receipt. On the one hand, the good news is that the contactless quota is going up to 30 quid as of autumn this year and, by 2020, Mastercard has stated that all readers the world over will let you pay with a quick flash of your card. NFC, it seems, will win the day and, if you thought it was all going to be about paying with a touch of your thumb, then think again.

Biometrics: The sensors at the heart of our wearable future

"You don't always want all of your credentials flushed out with every transaction you make. When the payments are small, there is really no need to take such risks," warned the TfL director of customer experience, Shashi Verma, at Mastercard's meeting on the future of payments.

Although Apple Pay's fingerprint reading authentication has proved popular in the US, it's not had the just as convenient Chip and Pin system to compare it to - a system that requires no trading of your biological personals.

With contactless, tap and pay, fraud incredibly low worldwide for the time being - an estimated £100,000 compared to the £27 million through standard card transactions – and with it just so easy to make card payments like this, it's going to be too cumbersome and too unnecessary to bother doing anything other than waving your plastic for anything less than, say, £50 at a time. Why let a merchant, an acquirer, a credit company and a bank have your fingerprint ID unless its really worth it?

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Of course, there are other situations for higher transaction amounts for which Mastercard is testing out using biometric confirmation.

"It's about finding creative ways of authenticating e-commerce," explained Johan Lindstrom, head of Digital Commerce, Mastercard Europe.

"We're trying to simplify how online payments work. At the moment, it's not good enough. To get out your wallet, then take out your card, put in your 16-digit number, your expiry date, your CCV code, then enter your billing address, get it wrong and do it all over again; that's not good enough.

"It was OK 10 years ago when it was just sitting at home at your desk with a PC but it's not good enough any more. It should be about lifting up your tablet, blinking once and it's done. That's how I want it to be."

Face recognition through mobile and tablet cameras is one area that Mastercard is looking at. It's a fairly straightforward method of taking a photograph of yourself and storing it in a system which then compares the visage it sees to the image that it contains in its memory banks. It's very much tried and tested, when you think of the modern passport gates at an airport, and one only hopes that Mastercard's platform would be cute enough not to be fooled by holding up a photograph of the person you're trying to defraud.

In the search for finding a biometric method that's harder to spoof, Mastercard is also developing a voice recognition program and it's one that would certainly be harder to get around unless you had a complete recording of a person's vocabulary or, indeed, an impossibly intelligent program that could listen to a few words somebody said and come up with a perfectly observed impression.

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The company also admitted to holding tests in Canada over ECG recognition like that heralded by the Nymi wristband. The idea is that the device can recognise your heart beat signature and then authorise any payments you make. If the technology could be embedded into a watch or another item that you might wear regardless, it could be compelling but it does raise Shashi Verma's issue of whether you want that kind of close personal data spread about the world's financial operators and whomever else might be listening. An ECG is a decent indicator of cardiac health and that could have insurance, employment and credit implications.

When it boils down to it, those large transactions, for which we consider it important enough to use biometrics, may be too few and far between to create such complicated systems for. Something akin to Amazon's fairly simplistic one-click online payments may suffice. On the other hand, these might be the primitive concerns of a society all too recently exposed to and fearful of the potential of sharing our data. We could well be the equivalent of seemingly prudish Victorians terrified of showing off our bare ankles when really we just need to unclench.

For the time being, Lindstrom and Mastercard's position is to test the biometrics out and then perhaps use them as added authentication when the price of your shopping basket breaks contactless levels. Where they set those barriers for each biometric method will depend on just how sensitive that information might be.

"In some cases you may not need to authenticate the user at all, and in others you may need to ask for two factors of authentication depending on the risk of fraud," described Lindstrom.

"If you buy the same washing powder from the same shop each week through the same device, the risk of fraud is low. But if your card details are used on a different device, in a different country for a large purchase like a car – then clearly we need to increase the strength of authentication because it's a riskier payment to approve."

But with such added hoops to jump through at the point of sale, that drives down convenience over the systems we already have, so don't expect to feel like you're in Gattaca any time soon.

Even if the biometrics of our connected selves might not be that important in our financial lives, the wearables we choose will be. While contactless card payments by NFC have rocketed, the same tap and pay technology available in our smartphones has never really taken off. One obvious reason is that it's just too cumbersome to take out your phone over a card but, according to TFL's Shashi Verma, there's plenty of demand for people to give it a try.

"Mobile payments are not around in any scale in the UK. The customer research shows that it is something that has a lot of promise but there's no real experience with it even in the US where Apple Pay is live because contactless payments are not spread throughout the network," he explained.

"If you want a good test case you have to look at Japan and Korea where they've been running contactless mobile payments for years where it is very popular. Clearly a lot of people are betting a lot on it and the great thing is that Apple has a lot of money and they'll continue betting on this technology. As a merchant, I'll take whatever comes.

Read this: Why paying with your wrist is the future of shopping

"Nothing happened with mobile payments by NFC because the network operators, who held all the power back then, they got hold of the technology and did nothing. They terrorised this industry for five years. It could have happened back in 2007 and they stopped it from happening. But if you look at it now, it's the handset manufactures that have taken it in and finally this industry is beginning."

It may seem little different, in practice, to paying contactless with a card but with the smartphone in your pocket connected to your smartwatch, suddenly there's no need to reach into your trousers, jacket or bag for anything at all. What's more, the added authentication that you may have in your mobile could potentially allow you to spend more by NFC than the £20 or £30 maximum - if the operators deem it safe enough.

Mastercard has said that Apple Pay and Android Pay - the latter of which would be present on 75% of the mobile phones worldwide - could be switched on for UK contactless terminals in a matter of days as soon as they're released over here. Tap and pay with a flick of your wrist for almost any transaction desired and you'll never bother with Chip and Pin again.

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