Bank Cards and Fingerprint Authentication

Some of the major credit card brands have launched a fingerprint or biometric scanner that is built into the credit card. This new security feature will allow customers to confirm an authentic and legitimate purchase by pressing their fingerprint against a scanner. This security feature removes the need for a signature or a PIN code.

The biometric feature on credit cards builds upon increasing levels of security that were initially lead by Europay, Mastercard and Visa (EMV) from 1994 that brought into use the smart chip.

The now common credit card smart chip provided enhanced credit card security by generating a unique code that is verified by the issuer every time the card is used to make a transaction. The unique code can only be used once and provides improved security to the magnetic strip technology that preceded the smart chip.

The introduction of the smart chip cut fraud in the U.S. by 50% in the first year after its release. A study released by the U.S Federal Reserve in 2018 demonstrated that card-present fraud in the U.S. dropped from $3,680,000,000 in 2015 to $2,910,000,000 in 2016. Now the biometric chip is the next addition in the ever expanding suite of security features offered to customers and users of credit cards.

The biometric chip can store fingerprint information and can be used for ‘contactless’ transactions to improve security as an optional feature. The PIN code authorisation option will still be available for cards that are set up with fingerprint authentication to facilitate a transaction when the fingerprint option is not available or when the fingerprint information has not been read correctly.

The biometric method of verification will be available from merchants that have updated their standard equipment. A biometric transaction will require the purchaser to tap their card into a merchant’s EMV terminal and then you place your finger on the biometric sensor on the card to verify your identity. Your fingerprint will be checked against the information stored on your card to approve your transaction. But before this new technology can be used worldwide, the banks and financial institutions will need to develop the systems to manage it.

The fingerprint information and the bioscanner exist on the credit card. The biometric cards will work with existing EMV card terminal infrastructure that allows swipe or tap payment.

You will be required to have your fingerprint scanned by your card issuer where the fingerprint data will be stored. The fingerprint information will then be encrypted as digital information and stored in the EMV chip on the bank card. Two of you fingerprints can be stored in the card’s memory chip. The system does not allow for another person’s fingerprint to be stored on your card, for example a family member who may trust to use the card. A card given to a family member, usually a child, will still need the PIN to validate a purchase transaction. During operation the fingerprint information always stays with the card. The biometric reference data is stored in the card's secure chip and used to confirm the scanned fingerprint at the point of purchase is the same fingerprint that is stored in the EMV chip.

However, the biometric system is not a panacea. It is possible to make fake fingerprints using high resolution images and the production of rubber imprints. These imprints can be worn over a criminals finger and trick the system into matching the fake fingerprint to the registered information on the EMV chip on the card. This new technology is another advance to make in person payments more convenient and more secure. However, fingerprint authentication will not be used for online purchases, where fingerprint fakes can be easily used. MasterCard is also planning to launch contactless payments that are authenticated via fingerprint while holding the card holders smartphones against the terminal.

All-in-one credit cards

The use of mobile wallets is steadily increasing throughout the world. They offer the convenience of touch and go payments, simplify quick purchases using cell phone apps and remove the need to carry a great deal of cards in your purse or wallet. Mobile wallets consist of a mobile app that has been uploaded with your set of credit, debit and reward card details. The system can include an accompanying physical credit card that can be presented for purchases as a normal credit card but can function at any chosen time as one of your credit cards. Online payments will not change, and still require the provision of primary account numbers and CCVs.

Mastercard expanded BIN series

Mastercard® has announced that they have received an additional range of 2-series BINs to add to the 5-series they currently issue. The 2-series BINs operate in the same way as the 5-series and we have made changes to our systems to accommodate the new numbers. Readiness for the 2-series across Mastercard issuers, merchants and other partners is scheduled on target dates. Mastercard customer financial institutions can expect to be issued 2-series BINs starting in 2017.

Credit and debit card fraud statistics

Global Credit card and debit card fraud resulted in losses totaling to $21.84 billion in 2015. Card issuers incurred 72% of those losses, while merchants suffered 28% of the total loses. The breakdown of the transactions are as follows:

  • Card issuer losses occur mainly at the point of sale from counterfeit cards
  • Merchant losses occur mainly on card not present (CNP) when customers buy online or pick up in a store.

(Source: Nilson Report, October 2016)

Cardholders impacted by fraud % - by country

Country Cardholders Affected (Overall) Change% 2014-2016
Mexico 56 23
Brazil 49 19
USA 47 6
Australia 46 9
India 37 -4
Singapore 36 8
Canada 35 14
South Africa 33 3
France 29 3
UK 29 1
Italy 27 7
Dubai 27 -17
Spain 26 N/A
Indonesia 26 4
Thailand 23 N/A
New Zealand 20 3
Germany 18 2
Sweden 14 4
Netherlands 14 1
Hungary 9 N/A

A direct comparison between the countries is not particularly insightful because of multiple factors that differ between the countries. However, the % of cardholders affected for most countries is surprisingly high and is indicative of the frequency of credit card fraud.

Cryptocurrency investment and debit cards

Bitcoin, Ripple, Iota and over 1000 other cryptocurrencies are currently the focus of huge investment interest. Prices for these cryptocurrencies have increased hugely over recent months as investors speculate with billions of dollars on values increasing.

Cryptocurrencies offer a payment system that is distinct from national currencies (fiat currencies) like the US dollar, the Euro or the Chinese Renminbi.

There are several features of cryptocurrencies as payment systems that are creating great interest. To summarise here, some prominent features include:

  • highly secure integrity of transaction recording using cryptography - computer encoding methods using peer to peer blockchain technology
  • potential for easy use of purchasing power without currency exchange and across international borders
  • potential to carry out transactions anonymously
  • currently independent of government regulation regarding currency issuance, transaction processing and verification

There are many other features that are peculiar to particular cryptocurrencies, which requires extensive examination to fully appreciate. But as a payment system cryptocurrencies appear to have some features in common with credit cards and debit cards.

Several cryptocurrencies have released cryptocurrency debit cards. These cards record your cryptocurrency account balance or digital wallet balance. Transactions using these cards operate in the same way as conventional debit cards, and can also include conventional currency transactions using national currencies like the US dollar.

When a purchase is made using the cryptocurrency debit cad, the Bitcoins, Litecoins, XRPs or other cryptocurrencies are converted to fiat currency at a rate dependent upon the current price for each coin.

These debit cards still require a BIN number and will be recorded on the BIN list. VISA have already issued debit cards with crypto-purchase capacity.

It is unclear to what extent cryptocurrencies will feature in payment systems in the future. Their appeal as an investment option is quite apparent. Their investment potential is clearly affected by the dramatic fluctuations in the market and is quite similar to share prices on stock market exchanges around the world.

Cryptocurrencies are currently available through debit cards and the amalgamation of these technologies will provide added convenience for many customers.