“As the debate over the value of EMV cards in fighting credit card fraud rages on following the implementation of the liability shift last October, one company is urging the addition of a new level of biometric security to some cards. SmartMetricis reportedly in talks with a number of card issuers to adopt miniature fingerprint scanners inside credit cards that conform to ISO standards and could satisfy bank concerns about card fraud.”
So is fingerprinting the next big thing in credit card security? It’s an interesting question. Let’s do a quick point-counterpoint.
“According to SmartMetric, 80 percent of credit card holders express concern about card and identity fraud, and 66 percent of them would pay for a safer, biometric secured credit card with a built-in fingerprint reader if it could guarantee their security.”
Consumers’ are definitely concerned about credit card fraud, but given the lack of personal liability that consumers have for fraud due to lost and stolen credit cards, I’m not convinced how acute that concern really is. That lack of personal liability is what makes me skeptical that a majority of consumers would in fact pay for biometrically secured cards, which would be necessary to cover the added cost for issuers.
I’m also a bit skeptical of the promise “guarantee their security”, for two reasons. First, biometric security built into a physical card would only secure card-present transactions. It would do nothing for card-not-present transactions, which as we all know, is where a majority of commerce growth is happening. Second, doesn’t the storing of biometric credentials on a physical card increase the risk of my biometrics being compromised if (or more accurately when) I misplace my card? There are numerous safeguards built into the iPhone that make it difficult for criminals to steal my fingerprints. Are those same safeguards built into these smartcards? Shouldn’t I, as a consumer, be more concerned with my fingerprints being stolen than my credit card number anyway?
Overview by Alex Johnson, Director, Credit Advisory Service at Mercator Advisory Group
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