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Monday, 30 september 2019 | Brenda Rodríguez López
Regardless of the amount of money you have, coins are sometimes heavy in your pockets. Although cards are much lighter, sometimes they are difficult to grab from the wallet or to find among other cards. Not to mention that they are protected by a PIN code that you can forget or mistake, and that they may also get deteriorated or demagnetized over time. These are problems that do not disturb the sleep, but ones that the financial system is willing to solve, by also responding to it with urgency. One of its main proposals: biometric payment. When will this technology arrive to our cities? The change may be much closer than it seems.
As we have already mentioned more than once, experience have taught us that something that was fiction a short time ago may become a reality soon. Nowadays, you can unlock your cell phone thanks to facial recognition, identify yourself at work through your fingerprint or open a banking app with the use of biometric technology. However, these examples only pave the way for what might come later on. To meet the expectations of the most demanding users, there are proposals such as the one put forward by the Municipal Transport Company of Madrid (EMT), through which passengers may start to say goodbye, perhaps forever, to their transport documents and the payment of bus’s tickets in cash.
Getting on the bus by using our face may soon become a habit. Mastercard, together with Banco Santander, the startup Saffe and EMT, have developed a project aimed at implementing biometric payment on buses in the Spanish capital. They do so within the framework of Madrid in Motion, a proposal for innovation and mobility which is promoted by the Madrid City Council and Barrabés.
This initiative suggests that passengers get on the bus and pay -or confirm that they have paid their transport subscription- through facial recognition technology. To do so, they only need to register on a mobile app and provide their bank details and pictures. From then on, when users get on the bus, they can verify or order payment thanks to a camera which is integrated in the vehicle. This project is still in a testing phase. Over the next few months, a hundred users will test the payment method on a specific EMT’s line. If everything goes according to plan, the system will be implemented in the rest of the lines then.
EMT’s project is not the only one of its kind in the Spain. Just a few days ago, a restaurant in Barcelona activated the first facial payment in a Spanish store: Face to Pay Viena. This is a pilot project, in which the Viena restoration group and the Payment Innovation Hub participate. It can be tested in the restaurant which is located at 405 Diagonal Avenue for two months. The idea behind this system is very similar to that of EMT’s buses; users download an app (available on Google Play and App Store), register their personal data, choose a payment method and provide their biometric parameters. Once this operation is done, they can pay for their orders without cards, cash or cell phones, only through the facial recognition technology.
The directive that regulates a new way of paying
These initiatives coincide with the entry into force of the PSD2, the new European regulation that standardizes payments through the Internet. This directive, which was approved by the European Commission in 2015, replaces the previous 2017 regulation (the Payment Service Directive). How does it affect the financial sector? The entities are now obliged to give access to their clients' accounts to third party companies or TTPs (Third Party Payment Service Providers), by always guaranteeing the security of their data. This action is known as open banking.
Before this, businesses had to contact intermediaries so that, in turn, they contacted those who were responsible for the cards, thus being able to charge payments on the current account of customers. Now, consumers can authorize businesses to be the ones who carry out operations through their bank accounts. As a result, payments are simpler and more agile. In addition, this directive may lead to new companies emerging, since, until now, the restrictions on TTPs were numerous.
Why are online sales safer with the PSD2? To date, it was only necessary to provide a user and a password or some biometric parameter for users’ identification. This new regulatory framework reinforces authentication (with the SCA, Strong Customer Authentication), by now making two of these three aspects be necessary: confirmation through something that users own (such as a cell phone or ID), know (such as a password or PIN code) or have (that is, biometric parameters). This means that, if your card is stolen, it is almost impossible for the thief to make a payment with it.
The CEU IAM Business School is aware of the fact that the field of digital finance has a great projection, in large part due to new trends such as mobile and biometric payments, the birth and development of new models like crowdlending or the boost of blockchain, to name a few. That is the main reason why it offers training courses like the Advanced Program in Digital Economy, FINTECH and Intelligent Society (Online) and the Advanced Program in Digital Finance - FINTECH. Ask for further information without any compromise!