Payment Systems and Biometrics: Mastercard's Innovative Payment Passkey Service in India

Payment Systems Enhanced with Biometrics

Mastercard has chosen India as the launchpad for its Payment Passkey Service, a new way of conducting online transactions, marking a significant step in the global payments landscape.

The new service will initially pilot in India with some of the country’s largest payment players, including payment aggregators such as Juspay, Razorpay, and PayU, along with major online merchants like bigbasket and leading banks such as Axis Bank, Mastercard said in a statement.

Unlike traditional one-time passwords (OTPs), which have become increasingly vulnerable to phishing, SIM swapping, and message interception, payment passkeys utilize biometric data stored on a user's device to authenticate transactions. This not only speeds up the checkout process but also adds a layer of security that is believed to be much harder for fraudsters to bypass.

The company said this service, announced at the Global Fintech Fest in Mumbai, is focused on enhancing the security and ease of online shopping by leveraging biometric authentication and tokenization.

India: The Ideal Market for Payment Systems

India's digital payment ecosystem is one of the fastest-growing in the world, driven largely by the government's push for a cashless economy and the meteoric rise of Unified Payments Interface (UPI). UPI has revolutionized digital transactions in India by providing a real-time payment system that has quickly gained popularity among consumers and merchants alike.

As of 2024, UPI transactions have soared to over 10 billion per month, dominating the digital payments market and posing a competitive threat to traditional payment networks like Mastercard and Visa.

Mastercard's decision to introduce its Payment Passkey service first in India is a strategic move that aligns with several key market trends and opportunities.

Security Challenges in Payment Systems

With the increasing adoption of digital payments, however, comes the heightened risk of online fraud. According to the Reserve Bank of India’s Annual Report for 2023-2024, fraud cases in digital payments have surged by nearly 300% in the last two years. This growing threat has made it imperative for companies to innovate around payment security.

According to industry experts, Mastercard's Payment Passkey Service, with its use of device-based biometric authentication such as fingerprints or facial recognition, addresses these security concerns, providing consumers with a more secure and seamless online checkout experience.