How Biometrics and Dynamic CVV Are Revolutionising How We Use Credit Cards

March 2023

Fintech & Payments

Nick Maynard

VP of Research

Biometrics technology (mostly fingerprinting and voice recognition) stands to become a major driver of credit cards among consumers and businesses over the foreseeable future, as predicted by our latest industry research, by adding an enhanced layer of security protection to counter card theft, as well as fraudulent activity.
 
Biometric cards simplify and further secure payments by storing the verification data on the card. It also eliminates the need for PIN with an integrated fingerprint reader as an authentication method. When a user’s/customer’s fingerprint matches the one already stored on their biometric card, the payment will be approved. This card also incorporates the secure element which contains the EMV-compliant payment applications, such as in a traditional dual-face payment card.

One distinct benefit of biometric payment cards is the fact that they eliminate transaction caps. Since the integrated technology cancels PIN verification, in doing so, it also removes the upper limit on payment amounts. This is enabled by comparing the saved fingerprint templates with the cardholder’s fingerprint on the card, which is then, if confirmed/verified, communicated to the consumer device verification method. The related terminal then approves higher-value payments when suitable.

Another apparent benefit of such cards is security in the face of credential and related identity theft. Although not yet prevalent with partial roll-outs, biometric cards can be game changers for credit cards’ endurance. For instance, the Visa Ready scheme and the Mastercard Biometric Card both combine chip technology with fingerprints to verify the cardholder’s identity for in-store purchases, whereas other players such as Google Pay support facial recognition for payments alongside of fingerprint identification.

In the same vein, technologies providing added layers of identity verification, such as dynamic CVV, will benefit credit cards’ use especially in online and mobile transactions.

Dynamic CVV involves replacement of the static CVV or CSC (Card Security Code) at the back of the payment card with a randomly generated number at time intervals, which, in some solutions, can be modified by customers. This eliminates the risk of any static CVV information to be stored or compromised and greatly reduces the risk of CNP (Card Not Present) fraud by also offering the ability to include such dynamic data in the authorisation message sent to issuers.

These codes are requested by customers when initiating a payment transaction through logging into a mobile app, which are then sent to them via SMS or email that expires following the completion of the given transaction (or at the time interval pre-defined by the customer). The code appears at the back of the card on a small, ePaper screen by using eInk. Issuers such as Visa and Mastercard have created algorithms for dynamic CVV generation, with which leading manufacturers comply.

Although dynamic CVV will not eliminate CNP fraud, it can alleviate security concerns around credit card utilisation, specifically when eCommerce transactions are considered.
 

Related Reading

 
Our complimentary whitepaper, Updating Credit Cards for the 21st Century, investigates the use of OTT business messaging across a range of use cases including CPaaS, conversational commerce, and omnichannel communications, as well as highlights the factors influencing the future development of the OTT business messaging market.

 
“A new study from Juniper Research has found that the number of credit cards issued via digital card issuance platforms will exceed 321 million globally by 2027, from 120 million in 2023. This growth of almost 170% reflects the use of new advanced digital capabilities, such as digital loyalty schemes and instant issuance, as card issuers aim to combat competition, including buy now pay later.”
 
“Juniper Research’s new Credit Card Strategies research report provides an independent analysis of the future evolution of this well-established market, with digital technologies changing the way credit cards are issued, accessed and used. It provides a comprehensive study of the growth expected in credit card use, and how credit card use will change over time, including the digital issuance of cards and how digital loyalty is being leveraged in the market.”