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Why MasterCard May Soon Ask You for a Selfie

Investopedia logoInvestopedia 02-10-2016 Amy Bell
© Provided by Investopedia

Want to make an online purchase with your MasterCard (MA)? Smile and say, “Selfie!”

In an effort to stamp out online fraud, MasterCard will soon ditch easy-to-crack passwords and instead ask cardholders to provide a selfie or fingerprint scan to verify online purchases. The company plans to launch the new biometric mobile payment verification services in the U.S., Canada and the U.K. this year. Once the technology is available, MasterCard users can choose to pay-by-selfie or pay-by-fingerprint for all online and mobile purchases.    

Known as the Identity Check app, the facial and fingerprint recognition software is yet another way to combat the ever-growing online-fraud epidemic. Online fraud costs retailers billions of dollars each year, and the cost of dealing with this type of fraud continues to rise. In 2014, retailers lost a whopping $3.08 for every dollar of fraud they sustained – and mobile fraud is largely to blame for these growing numbers.

Although only 14% of all transactions were made on mobile devices in 2014, these purchases accounted for 21% of all fraudulent transactions. Credit cards were used in more than half of mobile fraud instances. No wonder financial institutions like MasterCard are searching for ways to quash this prevalent threat.

A Safer, Simpler Way to Pay

Many users are already hailing MasterCard’s Identity Check as a secure and convenient way to verify online purchases. In late 2015, MasterCard tested the biometric technology in the Netherlands and the U.S. The two pilot programs lasted for more than three months and included 750 ABN Amro Bank customers in the Netherlands and 240 First Tech Federal Credit Union employees in California. Participants had the option of using either selfie verification or fingerprint authentication.

According to the study, 92% of all participants said Identity Check was more convenient than typing passwords, and 83% believed the technology was more secure. However, pay-by-fingerprint ranked much higher in the convenience category than pay-by-selfie. Overall, 93% of the pilot participants said fingerprint authentication was convenient while only 71% said the same of the facial recognition option.

In recent years, retailers in the U.S. and the U.K. have implemented similar verification checks during the online checkout process. However, many shoppers view these overly complicated verification checks as cumbersome and annoying, which is resulting in lost sales for retailers. In 2012, 18% of online shoppers in the U.K. deserted their online shopping carts due to “excessive payment security checks.” Even worse, U.S. retailers lost an unprecedented $118 billion in potential sales in 2015 thanks to “false positives” – transactions that are wrongly declined because they are mistaken as potential fraud.

With the Identity Check app, MasterCard is attempting to simplify the verification process and create an easier online shopping experience for consumers.

How It Works

Once the technology officially launches, MasterCard holders can install the Identity Check app on their mobile device and submit their fingerprint scan and a selfie. If they choose to pay-by-fingerprint, the app will require a fingerprint scan for every purchase. Fingerprint authentication can be used on all newer smartphones, including the iPhone 6, iPhone 6s. iPhone 7 and Android devices with built-in fingerprint sensors.  

For pay-by-selfie, the app will ask the shopper to take a photo each time he or she buys something online. Because the app requires the user to blink when they take their photo, the facial recognition scan will able to verify whether it’s a current selfie as opposed to a previously taken photo. This will prevent fraudulent online purchases.

A mobile device will be required for these MasterCard Identity Check verification scans. When consumers are shopping on their laptop or desktop computer, a request for a fingerprint scan or selfie will be sent to their smartphone before the purchase can be verified. Identity Check can only be used for online and mobile purchases – not in-store shopping.

MasterCard is also looking into additional ways to authenticate purchases, including iris scans, voice recognition and even monitoring a customer's heartbeat.

The Bottom Line

If you’re a MasterCard cardholder who frequently shops online, be prepared to submit your mugshot and/or fingerprint to the Identity Check app this year. This new facial and fingerprint recognition software is a safe, convenient way to verify online purchases and combat online fraud.

As financial institutions and online retailers continue to search for innovative ways to fight fraud, this type of technology will become increasingly common. According to Ajay Bhalla, president of enterprise security solutions at MasterCard, consumers around the world will be regularly using this authentication technology within five years.

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