How do biometric payments impact customer loyalty and retention?

1 Benefits of biometric payments

Biometric payments offer several advantages for customers and businesses that can boost customer loyalty and retention. For customers, biometric payments can provide a faster, easier, and more secure way to pay, without the need to carry or remember cards, PINs, passwords, or tokens. They can also reduce the risk of fraud, identity theft, or lost or stolen cards, as biometrics are unique and hard to replicate or spoof. For businesses, biometric payments can increase efficiency, reduce operational costs, and improve customer service, as they can eliminate the need for manual verification, paper receipts, or hardware maintenance. They can also enable more personalized and tailored offers, rewards, or recommendations, based on customer preferences and behavior, which can enhance customer value and loyalty.

2 Challenges of biometric payments

However, biometric payments also pose some challenges for customers and businesses that can affect customer loyalty and retention. For customers, biometric payments can raise privacy and security concerns, as they involve sharing sensitive and personal data with third parties, such as payment providers, merchants, or regulators. Customers may worry about how their biometric data is collected, stored, used, or shared, and whether they have control or consent over it. They may also face technical issues, such as false positives, false negatives, or system failures, that can disrupt or deny their payment experience. For businesses, biometric payments can require significant investment, integration, and compliance, as they involve adopting new technologies, standards, and regulations, that can vary across markets and jurisdictions. They may also face legal, ethical, or social risks, such as discrimination, bias, or backlash, that can damage their reputation or trust with customers.

3 Best practices for biometric payments

To overcome these challenges and maximize the benefits of biometric payments for customer loyalty and retention, customers and businesses need to follow some best practices. For customers, they need to be aware of their rights and responsibilities regarding their biometric data, and choose reputable and reliable payment providers and merchants that respect their privacy and security. They also need to keep their biometric devices and accounts secure, and report any issues or incidents promptly. For businesses, they need to be transparent and accountable about their biometric payment policies and practices, and communicate clearly and frequently with customers about the benefits and risks of biometric payments. They also need to ensure their biometric payment systems are robust, accurate, and accessible, and comply with relevant laws and standards.

4 Examples of biometric payments

Biometric payments are no longer a concept of the future, but rather a reality that is already being used by customers and businesses across the globe. For example, Apple Pay and Samsung Pay allow customers to authenticate and authorize payments with their mobile devices at compatible terminals or online platforms using their fingerprint or face. Amazon One lets customers pay at select Amazon stores with just their palm, while Mastercard Identity Check enables customers to use their face, fingerprint, or voice to verify their identity and approve online transactions instead of using passwords or codes. Additionally, Alibaba's Smile to Pay allows customers to pay at select KFC outlets in China with just their face, while still removing the need for a card or device.

5 Future of biometric payments

Biometric payments are anticipated to grow and advance as customers and businesses embrace them and more biometric modalities and technologies arise. Trends and innovations that could shape the future of biometric payments include multi-modal biometrics, which combines two or more biometric factors for increased security and accuracy; behavioral biometrics, which utilizes behavioral patterns for authentication; biometric wearables, such as smartwatches or rings; and biometric implants, such as microchips or tattoos. All of these enable biometric payments without the need for external devices.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?