Closed loop applications are not as effective at fighting fraud in a shared environment, such as at an ATM or over the bankcard networks, because they can only authenticate cardholders of the bank that has deployed the biometric application. That raises the question of whether deployment is worth the cost.
"If one bank deploys scanners at its ATMs and enrolls all it cardholders, but the ATM is linked to a shared network, there is no way to guarantee transactions made by non-bank cardholders are legitimate," says Moore.
Indeed, criminals have developed highly sophisticated means of capturing ATM cardholder PIN numbers. One device is a thin sleeve that fits inside the card reader and captures all data entered into the PIN pad and off the card's magnetic stripe. Once in possession of that information, a counterfeit card can be made and the cardholder's account accessed with their PIN.
Some payments executives say market forces are working to move biometrics into the mainstream. "There is a lot of research that indicates consumers are increasingly becoming uncomfortable with ID theft and fraud," says Julie Krueger, vice president of emerging technologies for Los Angeles-based JCB International Card Co. Ltd. "The market is going to have to do something to address these problems."
Krueger contends that linking the technology to loyalty applications, a la Piggy Wiggly Carolina Corp., will be one of the best ways to introduce consumers to the technology. Still, biometric experts predict it will take at least five years to build a full head of steam in the U.S. during which the market will discard competing authentication technologies, such as smart cards and USB tokens.
Without a doubt, the growing affordability, increasing reliability, and irrefutable authentication capabilities of biometric applications will help push the technology ahead of its competitors. "Ten years ago we would not have been able to afford this application," says Piggly Wiggly Carolina's Postell. "It is still a pretty expensive technology compared to other point-of-sale equipment, but we feel it is well worth the investment."
For biometric proponents, such endorsements are music to their ears.