Retail Central Bank Digital Currencies (CBDCs) could ensure open payment platforms and a competitive level playing field. IDEX Biometrics’ Vince Graziani asks what role biometrics will play in the democratisation of payments
As many as 1.7 billion adults globally do not have access to a bank account, something which has been accelerated due to the financial pressures of the pandemic.
In an effort to stay safe, many businesses chose to only accept contactless or card payments – leaving those with only cash in a vulnerable position.
In the UK alone, it is estimated that there are 14 million people who are deemed financially excluded, the pressures of which have often resulted in a reliance on alternative methods and institutions that charge high fees, further reinforcing the cycle of poverty.
CBDCs could provide a solution
It’s an important question, particularly as some will be cautious about security for this new banking method.
The future of inclusive banking for all
The world is increasingly relying on transactions that don’t use physical cash; while during the pandemic this was a safety concern, now it is simply a matter of convenience for many shoppers, who have become used to not carrying cash.
We must ensure, therefore, that many who still rely on cash are not left behind due to their location, background, or circumstances.
CBDCs allow this as payment transactions to be decentralised as well as provide a more diverse set of payment options without comprising security.
Biometrics: the next logical step
These aren’t convenient for the average consumer, especially to make payments in their daily lives or access funds. Instead, consumers need what’s referred to as a cold, or hard, wallet – an external form of currency storage not connected to the internet.
Of course, the most familiar and easily adaptable form of a hard wallet to store CBDCs is a payment card.
Enhanced security can be achieved through biometric payment cards
As regulators and Governments around the world explore their own digital currencies, they must place payment security and financial inclusion at the centre of their strategy.
By using biometric technology, consumers can feel safe in the knowledge that their money is protected and accessible, empowering millions of consumers to take ownership of their own personal economy.
Incorporating fingerprint biometric authentication to digital currency wallets or payment cards is critical to enhance security and inclusion of CBDCs and to build a more democratic payment industry for all.
Vince Graziani is CEO at IDEX Biometrics ASA