Digits go digital

Did you know that cattle are probably the oldest form of money, dating back to 9000 BC? We’ve moved on a bit since then and we’re now all familiar with Chip & Pin. Pin codes have been gradually introduced around the world over the past few years to varying success and now ‘pin-less’ payment cards are being launched by major banks, including Citibank’s key fob trial in New York and Barclaycard and ComCab’s payment terminals for taxis in the UK, allowing consumers to make small payments using RFID chipped credit cards (similar to the way the London Underground Oyster card scheme works).

However an even further leap is already being used by millions of people in the US and being trialled in the UK. Welcome to the world of biometric authentication or the use of fingerprints as identification and authorisation for payment. Picture it … you walk into a shop without so much as a wallet, pick up what you want and take it to the till. You place your finger on the reader where it recognises you and brings up your virtual wallet allowing you to choose which account to debit. ‘Ok’ the transaction and you’re done. It’s the next step in the evolution of payment systems and could mean there'll be no need to even carry a wallet around with you in the future.

Early research in the US looked at consumer attitudes to using this fingerprint payment for university meals and quick service restaurants and reported that consumers were surprisingly willing to use it with 52% willing to use it in universities and 42% for restaurants. Those willing to use it see it as more convenient (95%), faster (94%) and more secure (75%). Those unwilling to use it cited privacy as the biggest concern (65%). Interestingly, 84% of all responders agreed that biometrics could prevent identity fraud and 64% agreed it could protect consumer information. All in all consumer knowledge of this new technology is increasing rapidly and acceptance is following.

Piggly Wiggly is the first US retail chain to roll out biometric payment pads to some of their stores.(check out http://arstechnica.com/news.ars/post/20050718-5110.html)

And if you’re interested in the story of how we got from cows to fingerprints then read on. Coins were first used in Lydia (now part of Turkey) around 680 BC and spread rapidly through Greece and beyond. Clearly they were easier to put in your pocket than a cow! A severe copper shortage in China in the early 9th Century led to the introduction of paper money but it didn’t take off and even despite the invention of the printing press in 1440 it was abandoned in 1455. It was only reintroduced in England c1660 in the form of goldsmith’s notes which were found to be more convenient than handling coins or bullion. Official credit emerged in 1730 but charge cards didn’t come along until 1950 when American Express and Diners Club joined forces to bring us the Diners Club. The first credit card arrived one year later. Magnetic stripes revolutionised this new form of plastic payment in 1970 and by 2003 electronic payments had overtaken cash payments.

Who knows where it will lead but if privacy and security concerns can be addressed, it could be reasonable to expect biometric payment to be widespread in the next 10 years.