In September 2013, Apple Inc. launched the iPhone 5S, which comes equipped with fingerprint scanning technology for the first time. In addition, near field communication (NFC) is inching its way into POS terminals, and mobile NFC wallet solutions – like the telecommunication companies' offering called Isis – are rounding into form.
With the establishment of the NFC infrastructure and Apple's introduction of biometrics into mainstream culture, gateway provider Payscape Advisors believes a turning point in mobile NFC payments has been reached. In a question and answer session, Jason Swenk, Chief Innovation Officer at Payscape Advisors, explored what Apple's addition of biometrics means for NFC technology, consumers and payment solution providers.
The Green Sheet: How will advanced security technologies, including the use of biometrics, affect the payments industry?
Jason Swenk: Cardholder security controls today are limited to PIN numbers and ZIP codes. The use of fingerprint technology to authorize payment will not only lower the risk of fraud but ultimately reduce processing fees and increase cash flow for merchants and business owners. Financial technology companies will begin to compete for biometrics security in addition to the areas payment processors are already competing in such as customer service, rates and fees, convenience, and software integration.
TGS: How could biometrics affect merchants and small business owners? Swenk: The fact that iPhone users will begin to adopt fingerprint technology speaks volumes. These people will become the early adopters of the technology and will eventually demand alternative payment solutions, including instant purchase on a smartphone without the use of passwords or inputting credit card information.
To that end, businesses, both brick-and-mortar and e-commerce, will need to adapt to consumer preferences and offer customized and convenient payment options. And as merchants begin to use more advanced and secure payment technologies, both processing rates and chargebacks will decrease significantly.
TGS: How could biometrics affect mobile commerce?
Swenk: It's going to open a whole new world for developers. They'll build apps that integrate fingerprint scanning for purchases and make shopping on smartphones easier than ever before. The easier it is for consumers to purchase on-the-go, the more likely it is that they will adapt to new payment methods such as m-commerce.
TGS: Any last words for merchants lost in the payment technology muddle?
Swenk: When it comes to merchant services providers, business owners need to take a close look at the levels of customer service, industry knowledge, and responsiveness they've received from the beginning of the relationship. A best-in-class processor should be one that is not only readily available to manage the account and solve problems but is at the forefront of innovations in payment technology, user experience and security.
Consumers are over-sharing through social media and location-based services. Financial technology companies should pay attention and leverage this big data to partner with retailers and provide a mobile commerce experience that is personalized, easy and secure. That's the key to brand loyalty and customer retention.
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