Fingerprint payments taking off despite security concerns
Let your fingers do the talking
Consumers embarking on a shopping spree may be able to leave their wallets behind in the near future, despite some security and privacy experts' concerns. This week, Pay By Touch Solutions, a San Francisco-based firm whose system allows customers to pay at participating grocery stores with the press of a finger, announced that investors have pledged $130m to fund the company's expansion plans. And, rival BioPay has already enrolled more than two million people into its service for cashing payroll checks and paying at the supermarket checkout.
Paying by fingerprint is a hit with consumers, because people want convenience and faster check outs, said Shannon Reardon, director of marketing for Pay By Touch.
"The primary reason consumers sign up is for convenience," Reardon said. "They don't need a wallet or purse. When it become more ubiquitous, consumers won't have to carry cards around."
Moreover, the systems are popular with merchants, who stand to save a significant amount in processing fees if their customers pay using fingerprints linked to their bank accounts - up to 75 per cent over straight credit card fees, according to BioPay. The market for such point-of-sale equipment and services will jump to $440m - or 8.4 per cent of the market for biometrics - by 2010, up from $31m - or two per cent of the market - in 2005, according to research firm International Biometric Group.
Yet, the security of the systems largely remains a question mark. Security and privacy experts worry that pay-by-fingerprint schemes could lead to hard-to-combat identity fraud and greater threats to civil rights.
"What are their security practices and how much more extraordinary are they compared to a ChoicePoint, a LexisNexis, or a CardSystems?" said Pam Dixon, executive director of the World Privacy Forum. ChoicePoint, Reed Elsevier's LexisNexis, and CardSystems Solutions have all had high-profile incidents where consumers' financial and personal data has been leaked.
"Stealing a credit card number is one thing," she said. "But if your biometric is stolen and can be reconstituted, then that is a big problem."
Both Pay By Touch and BioPay pledged that their customers' security and privacy are of paramount importance.
Both companies require customers to physically enroll and link their fingerprint and customer ID number to one or more financial accounts. Social Security numbers are not used and accounts are only identified by the last few digits of the account number. The merchant never sees any of the information and nothing is left behind, said Donita Prakash, vice president of marketing for Herndon, Virginia-based BioPay.
"It is the least amount of information left behind about you for any of the possible ways of completing a transaction," Prakash said. "Nothing physical passes to the merchant that could be skimmed, and it's not leaving your body."
Moreover, neither system uses the actual fingerprint to identify the user, but creates a template of the fingerprint - generally a set of numbers measuring specific features of the print. The data format reduces transmission time, but also makes it impossible to reconstitute the original fingerprint, said Larry Hollowood, chief security officer for Pay By Touch.
"When we explain to our consumers that we are not taking the full fingerprint, but that we have 40 data points that can't be turned into a fingerprint, that increases the adoption rate," he said.
For most consumers, the firm's security pledges are either enough or take a back seat to the convenience of paying by fingerprint. A survey commissioned by BioPay found that half of those polled believed fingerprints to be more secure than other forms of payment and, more importantly, more convenient.
"Convenience almost always wins out, even over security," BioPay's Prakash said.
However, at least one of BioPay's practices has raised eyebrows among security and privacy experts. While Pay By Touch executives say the company does not keep the original image of the fingerprints used by the customer to enroll, BioPay does, storing two fingerprints images from each of its two million customers encrypted in an offline database.
Such a database would quickly become the target of identity fraudsters, said Bruce Schneier, chief technology officer for Counterpane Internet Security and author of several books on security and encryption. While there is no obvious use for a database of fingerprints today, that does not mean there will not be uses in the future, he said.
"A decade ago, no one really knew what use a database of a million credit card numbers would be - turns out you can do a lot of things with it," Schneier said. "Right now, we are not at the point that there are obvious uses of fingerprint, but 'I don't know' is not a good response when discussing security threats."
Such a database will be valuable in the future, and criminals will find a way to get access to the data, he said.
"Keeping the system offline is not a solution, because you have to worry about insiders as well as outsiders," Schneier said.
Recent events have shown that compromising computers by attacking their network connection is only one way to get access to sensitive financial data. Bank of America lost 1.2 million records of financial accounts not through a system compromise, but when sensitive, and unencrypted, backup tapes went missing. And, Choicepoint's had more than 145,000 consumer records stolen when fraudsters gained access to the data broker's records by posing as legitimate firms.
Privacy experts worry that the existence of a database of fingerprints would also be a lure to law enforcement. If an unknown fingerprint is found at a crime scene, checking it against a database such as the one BioPay keeps would likely become standard procedure, said the World Privacy Forum's Dixon.
"If I was a law enforcement agency and there was a wide deployment of BioPay, they would be my best friend," Dixon said. "When you are thinking of really bad scenarios (from a civil rights point of view), that is it. It's a security violation waiting to happen."
Moreover, a database of fingerprint templates may be just as useful to criminal investigators as a database of images. If a template could be generated from a latent fingerprint left at a crime scene, then any database of fingerprint templates could be used to match a print to a person.
BioPay's Prakash stressed that the company would control access to the database to the extent allowed by law.
"We make a pretty big point that we do not share with the government," she said.
Yet, the marketing executive for BioPay is less certain on what the company's reaction would be to a subpoena from law enforcement to check its database for a certain fingerprint.
"It hasn't happened yet, and I don't want to speculate," Prakash said.
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