Mastercard and Visa dive deeper into the biometric payments space with new partnerships

  • Mastercard will bring FinGo’s vein-scanning payments solution to more markets.
  • And Visa is working on a biometric authentication solution for online transactions with the UAE’s Abu Dhabi Islamic Bank.

Both card networks struck new deals in the biometrics space, which is expected to be worth $82.8 billion by 2027.

Chart showing percentage of people who feel comfortable trying biometric payments
37% of people feel comfortable trying biometric payments

Here’s what you need to know:

  • Mastercard partnered with FinGo to bring the fintech’s biometric authentication offering to global markets. FinGo lets users verify their identities and authenticate transactions using their unique finger vein patterns. The partnership gives FinGo access to Mastercard’s white-label payment processing solution, Mastercard Payments Services Gateway (MPSG), to help it grow its footprint in the Middle East, North Africa, Asia Pacific, Australia, and North America.
  • Visa brought a biometric authentication solution to the UAE’s Abu Dhabi Islamic Bank (ADIB). The partnership leverages Visa Consumer Authentication Service, which uses nontraditional payment verification methods like fingerprint and facial recognition. Through this integration, bank customers can use the tech to validate online transactions through the ADIB mobile app. It’s also the UAE’s first biometric authentication solution for ecommerce transactions.

These moves can help Visa and Mastercard stay on top of an emerging payments trend. Thirty-seven percent of global consumers said they are at least somewhat comfortable with the idea of biometric payments, according to a Mastercard survey.

More people may have been willing to try this method in the last year after the pandemic pushed consumers to adopt new digital payment forms, including contactless payments. And this trend looks sticky: 93% of global consumers would consider using at least one emerging payment trend in the next year, per Mastercard. Visa’s and Mastercard’s latest biometric partnerships get them more involved in an increasingly popular space, which can help prevent them from losing market share to fintechs and remain leaders in the payments industry.

They also complement the issuers’ existing fraud prevention initiatives. The pandemic opened the door to a deluge of fraud, particularly ecommerce fraud, which hit $17.5 billion in 2020 and is expected to break $20 billion this year, per Juniper Research-heightening the need for stronger payment authentication solutions.

This could also be why both card networks ramped up their identification services: Visa recently invested in biometric authentication startup LoginID, and Mastercard just acquired digital identification platform Ekata. Visa’s and Mastercard’s recent partnerships in the biometrics space might push more merchants and financial institutions to work with them so they can use those value-added services.

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Which industries would benefit from real-time payment adoption?

Faster payments are garnering greater interest from US financial institutions, businesses, and consumers. Over the past decade, several offerings in particular have risen to the forefront in the US, with some settling transactions in a matter of seconds. But those that don’t deliver instant settlement are still viable, given the significant reach and ability of faster payment systems to handle both credit and debit transactions.

B2B, consumer-to-consumer (C2C), and business-to-consumer (B2C) payments all stand to gain from shorter settlement times, which offer greater financial flexibility and control. Faster payments’ speed also provides valuable transparency for firms, which benefit from the certainty of immediate payment.

B2B payments

US B2B Payment Transaction Value
Real-time payment (RTP) systems stand to reap gigantic rewards from B2B companies.

B2B payments have been slow to digitize relative to other types of payments. But with the US B2B payment market set to reach $26.742 trillion in 2021, per our forecast, real-time payment (RTP) systems stand to reap gigantic rewards if they can gain even a sliver of the market.

This year, $12.034 trillion in US B2B payments will be made via check or cash, making up about 45% of the market. That means a huge number of transactions would see noticeable improvements from faster settlement speeds.

Furthermore, $9.599 trillion will transact via Automated Clearing House (ACH) payments this year, and businesses that have already chosen to use ACH will be keen to upgrade to a faster digital payment option.

C2C payments

Mobile P2P Payments Transaction Value
Mobile P2P payments are among the C2C use cases that could benefit from real-time payments (RTP).

C2C payments have quickly digitized, thanks to the rise of platforms like PayPal’s Venmo and remittance firms including Remitly. Those platforms, as well as actual remittance services, are improving by incorporating faster payments.The US mobile peer-to-peer (P2P) payments market will reach $538.73 billion in 2021, according to our estimates.

The US mobile peer-to-peer (P2P) payments market will reach $538.73 billion in 2021, according to our estimates. These transactions already occur digitally, as do many remittances, so shifting to a faster platform should boost consumer appetite, since faster payments give consumers access to their funds sooner.

B2C payments

US Retail Sales
B2C payments include bill payments, payroll, and retail.

The quicker settlement speeds and additional transparency of faster payments are attractive to firms and consumers involved in B2C payments, which include bill payments, payroll, and retail. We forecast that retail sales will hit $5.630 trillion in the US in 2021.

Also in this segment are bill payments, which hold an estimated value of $2.75 trillion annually, per doxo Insights.

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This article was originally published on eMarketer.

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Banking fintech providers and startups to watch in 2021

The COVID-19 pandemic has sped up our transition to a digital and cashless society, causing more people to become reliant on technology as a means to manage their money. As customer expectations evolve and more companies populate the financial technology space, finserv companies are integrating technology into their offerings in order to set themselves apart from the pack.

Insider Intelligence has put together a list of the top banking fintech providers and startups – Monzo, Starling Bank, Ally Financial, Tandem, Tide, N26, and Atom. We’ll share why each of these companies have been able to outpace other competitors, and the implications of their success. 

Monzo

Since being founded in 2015, Monzo has created a name for itself as a UK digital-only challenger bank with a bright coral-colored card, and is now valued at nearly $1.4 billion. 

Monzo’s mobile app aims to meet customer needs, offering budget tracking, cashflow advice, and the ability to make domestic and international payments. Their capability for customers to easily move money between accounts offers immense global appeal.

Monzo has been able to connect and build trust with the modern customer, by communicating in an informal, conversational tone. They have also used the Monzo Community Forum to build a brand community, listen to and engage with their customers, and contribute to the overall success of their brand.

Starling Bank

Starling disrupted the banking world in 2014, offering the benefits of incumbent banks, such as the ability to deposit cash and checks, plus added perks such as easy payments and instant notifications.

While Sterling has fewer customers than other challenger banks, it has more of their money, which suggests that customers are using this card for day-to-day expenses, and not just as a spending card.

Ally Financial

Ally Bank

Ally Financial went public on April 10, 2014, and has since drawn in over 8.5 million people with its high rates and low fees.

Ally is also know for their superior customer service. Diane Morais, Ally’s president of consumer and commercial banking products, echoes their company’s  sentiment when she shares, “It’s not okay to just be satisfied. Your money should be working as hard as it can.”

Tandem

Tandem is true to its name, given its capacity for customers to view all their money in one place. With open banking, individuals can access their spending and savings without logging into separate accounts.

Tandem’s simple interface makes it accessible to all, even those who aren’t as familiar with online banking. They also offer a “pocket accountant,” that analyzes all customer spending and offers custom tips to help save them money. 

Lastly, Tandem has the advantage of being connected with most major banks, which keeps them ahead of competitors that aren’t yet compatible.

Tide

Tide has attracted more than 200,000 customers since its launch in 2015, winning many over with their “three minute” business card sign-up and their robust mobile app that offers a number of unique features. 

Customers have the autonomy to freeze and unfreeze their card, check their pin number, and reorder a lost card. They can also integrate their transaction feed with accounting software in order to export their financial information as needed.

N26

N26, Europe’s first mobile bank, was founded in Berlin in 2013, and has since gained popularity among those who wish to transition away from incumbent banks, but prefer the security of a banking license. It also has excellent currency conversion rates, whch makes it ideal for international travelers. 

Their app is highly intutitive, and given that this company is relatively young, we can expect more innovation in the future. They are best known for their straightforward approach to banking, which has attracted many well-known investors, such as Silicon Valley’s Peter Thiel.

Atom

Atom is one of the inital challenger banks that got it’s start in 2016, by making banking easily accessible to customers through their smartphones and tablets. Unlike many of its competitors, Atom offers savings accounts and mortgages, and business loans, as opposed to currents accounts.

Atom offers a number of safety and security features. Instead of using the standard passcode and password combination, they use face and voice recognition to keep their customers’ money safe.

More to Learn

This comprehensive list of fintech companies merely scratches the surface of the fintech industry, which is growing in unprecedented ways.

And here are some related Banking reports that might interest you:

  1. The Banking-as-a-Service Report, which looks at five major BaaS providers, ranging from fintechs to 20-year-old legacy providers that we think represent a proper cross-section of approaches to offering BaaS.
  2. AI in Banking, which identifies the most meaningful AI applications across banks’ front and middle offices. 
  3. The Global Neobanks Report, which explores how the neobank market has grown rapidly, and what’s in store as the industry pivots from hyper-growth to sustainability.
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