Biometric payment trends and technology in Southern California

Biometric Payment Trends in Southern California

The objective of this work is to research biometric payments as a business proposition. Paying for purchases with debit and credit cards, as well as online banking, has become more popular than traditional cash payment methods. This will include trends in Southern California in relation to biometric payments and will examine the current and future trends in this industry and sociological factors (cultural, political, economic, labor, etc.) that may affect this business.

The work entitled "Biometric Payment: The New Age of Currency" states that a small company located in Berkeley, California "is paving the way for cardless and cashless payment at the point-of-sale - with more convenience to the consumer and many more benefits to the merchant than ever before." (Hospitality Upgrade Magazine, 2000) the company has introduced the "next generation of electronic payment via SmartTouch Inc." which uses the individual's fingerprint for verification.

I. How Biometric Identifiers Work

Those who are proponents of this technology 'praise it as a convenience paradise" since the customer does not need a PIN number, check, cash or a plastic credit card. Instead, the individual's finger print image is either matched or rejected along with the customer's payment mode, which may be either credit, debit, or ATM. According to Molleen Theodore:

Increasingly, the way to keep information secure is to offer up a piece of yourself - a biometric identified - to be recorded and used to verify your information. Biometric identifiers are physiological and behavioral characteristics that are completely unique to you." (1998)

The way that the biometric identifier works is simple: the customer places their finger on a scanner and a picture of the fingerprint it taken. The software then converts the fingerprint "into a map of minutiae points" (Hospitality Upgrade Magazine, 2000) and then is stored for reference. When making a purchase "the user holds a finger to the scanner, and the computer matches the stored print-map to the fingerprint. Only the minutiae points are stored in the image, not the actual fingerprint." (Hospitality Upgrade Magazine, 2000)

II. Different Forms of Biometrics in Use

The work "Fingerprint Authentication" states that there are numerous biometric approaches currently in existence. These approaches include those of: "...voice recognition, retina scanning, face recognition and fingerprint recognition. " (2002) the technology that is "increasingly being acknowledged as the most practical technology for low cost, convenience and reliable security" is the fingerprint recognition biometric method. Stated is that: "Fidelica Microsystems new and exclusive technology overcomes the limitations of previous systems and sets a new standard for compact, reliable and low-cost fingerprint authentication." (Fingerprint Authentication, 2002)

III. Merchant Benefits in Biometrics

Merchant benefits in biometric payment methods are many. One example is the fast-food drive-through restaurant that upon scanning the customer's fingerprint has the ability to know what the customer's preferred meal is because the information has been stored in the biometrics database. Faster and more secure payments is another benefit as the cashier will no longer require seeing the customer's identification or getting the credit card slip signed by the customer "because the scanned image is almost fraud-proof identification." (Hospitality Upgrade Magazine, 2000) Also stated is that another byproduct of the biometric technology is improved customer loyalty programs. Stated is that: "Now with every customer purchase loyalty points or rewards are saved electronically and can be redeemed at the POS." (Hospitality Upgrade Magazine, 2000) High Tech Burrito in Berkeley California reports that after being approached by SmartTouch to participate in a pilot project for the biometric payment system the new loyalty program began with a one-time registration. The customers were given loyalty points that could be used for food purchases. It is estimated by the company that "at a single location they had about 1,000 consistent customer and that by the projects end they have 5 to 75% of consistent customers who had signed up for the customer loyalty program via SmartTouch." (Hospitality Upgrade Magazine, 2000; paraphrased)

VII. Biometric Market

The biometrics market is stated to be "poised for dramatic growth - and acceptance - in the next few years: The overall market will increase to $4.35 billion in revenue by 2007 from the current $600 million and the PC/Network access segment will generate $872.1 million in 2007, up from the current $115 million, according to International Biometric Group,.'Two things are happening,' Rogers says. 'Cost has come down, need has gone up and those two lines have crossed. Now people are saying 'this biometrics thing can help us.'" (Measuring Biometrics, 2003) Biometrics will penetrate everything from government, schools, and healthcare as well as homeland security initiatives. (Measuring Biometrics, 2003) According to the: Measuring Biometrics" report the costs will range between $100 - $200 per computer for common biometric hardware such as fingerprint scanners. The following chart labeled Figure 1 lists the Biometric Revenues for year 2002 as well as the projected Biometric Revenues for 2007.

Figure 1: Biometric Revenues

Est. 2007

Overall Biometrics Market

600.8 Million

4.35 Billion

PC / Network Access Biometrics

115 Million

872.1 Million

Physical Access / Time & Attendance

90.9 Million

649.1 Million

Source: International Biometrics Group (as cited in Measuring Biometrics, 2003)

The projected growth in the overall Biometrics Market between the years of 2002 and 2007 are astronomical and is growth that appears to be on-track. The difference in traditional authentication and biometric authentication is illustrated in the following labeled Figure 2: 'Three Types of Authentication':

Figure 2: Three Types of Authentication

Something you know: Passwords, PINS, personal information

Something you own: Card key, Smartcard (which stores personal information)

Something you are: Biometrics like fingerprints, iris and facial features, hand geometry.

Source: Measuring Biometrics (2002)

VIII. Other Factors Affecting the Biometric Market

Southern California is leading the market in biometric technology as it gained use in various stores and chains all across that area of the country. Furthermore, in the process of review of the biometric industry this researcher notes that many of the creators, developers and manufacturers of the biometrics technology are located in California and specifically in Southern California. The Homeland Security main division is also located in California. Security, not only in terms of personal banking security but as well home security is an issue in Southern California as evidenced in a February 7, 2007 news report entitled: "Police: Billionaire Robbed by Man Posing as Delivery Person." The report relates a Southern California financier whose home was invaded by a deliveryman. The report states the fact that: "...there was no security of any type in place to stop the "phony deliveryman from forcing his way into the house and holding Rad, his wife and housekeeper bound with duct tape for hours before making off with a few hundred dollars in cash..." (KABC.TV Los Angeles News, 2007) the news report additionally states: "Investigators suspect the intruder specifically targeted Rady, a financier who was ranked No. 140 last year on Forbes magazine list of 400 richest Americans." (Ibid)

Summary and Conclusion

Today's easy access of individual personal information both via the Internet and through other means have made security a new issue throughout the entire United States and particularly in the more affluent areas such as Southern California. Biometric authentication is the new technology, and certainly the newest technological applications and having use of them is a status symbol as well as being the best security that technology can offer, thus it is the opinion of this researcher that the biometric market in Southern California is prime for exploitation in all areas of business and commerce. The costs for implementation of this type of authentication system is relatively cheap with high rewards being claimed among businesses using biometrics technology.