INTERVIEW: IDEMIA’s Patrice Meilland and Mehdi Elhaoussine On the Future of Payment Cards

INTERVIEW: IDEMIA's Patrice Meilland and Mehdi Elhaoussine On the Future of Payment Cards

Biometric payment cards are an exciting new technology that is only just starting to emerge, but as real-world trials have gotten underway, a few leaders have emerged in this space. IDEMIA, one of the biggest biometrics companies in the world, is naturally one of them. The company has teamed up with other leaders in the biometrics and financial services sectors to collaborate on new solutions, and now has high-profile pilot programs underway.

Accordingly, these activities were a central focus in a recent interview conducted by Mobile ID World Managing Editor Peter Counter, who spoke with IDEMIA Powered Cards SVP Patrice Meilland and Digital SVP Mehdi Elhaoussine. The conversation touched on things like IDEMIA’s F.CODE biometric payment card trial with France’s Société Générale and its adjacent “MOTION CODE” dynamic CVV solution, as well as the remarkable take-up of IDEMIA’s digital mobile payments solutions thanks to its partnerships with leading mobile wallets like Google Pay.

Read the full interview with Patrice Meilland, SVP, Powered Cards, IDEMIA, and Mehdi Elhaoussine, SVP Digital, IDEMIA:

Peter Counter, Managing Editor, Mobile ID World: Over the past two years we have seen the advent of biometric payment cards and IDEMIA has played a key role in this from the beginning. Now that it is a major trend how close are we to seeing mass commercialization of this technology?

Patrice Meilland, SVP, Powered Cards, IDEMIA: We are getting closer everyday but with each new technology, and I would say payments using a biometric card is relatively new, we need to go through some pilot programs to test the technology. With some of our more advanced pilot programs we expect to have rollouts in 2019.

MIDW: One of the major undergoing trials with the IDEMIA F.CODE payment card is with Société Générale Bank, please tell me about that current trial of the card?

Patrice Meilland, SVP, Powered Cards, IDEMIA: They are trying our F.CODE card which as you know uses a biometric sensor instead of a four-digit PIN code to identify the user. They will trial this card with certain customers just like they did with our MOTION CODE a while ago, prior to determining their marketing objectives and how to bring it to market. We don’t know at this point in time when rollout will happen in terms of deployment.

INTERVIEW: IDEMIA's Patrice Meilland and Mehdi Elhaoussine On the Future of Payment Cards
The F.CODE payment card replaces PINs with fingerprint biometrics.

MIDW: You mentioned the MOTION CODE which is a card with a dynamic CVV display on the back and it seems to me that there is a synergy between the biometric sensor card and the dynamic display card, do you see in the future a potential for these technologies sharing space on the same card?

Patrice Meilland, SVP, Powered Cards, IDEMIA: That is a possibility because one is geared toward online payments while the other one is geared toward proximity payments. It makes a lot of sense to think that we could unite the two together. That is certainly a possibility.

MIDW: Just in general with both of these cards what have been some of the challenges in bringing powered payment cards to the market?

Patrice Meilland, SVP, Powered Cards, IDEMIA: One challenge is definitely the technology challenge because it is quite amazing the amount of electronics in the cards and the very, very low power that the electronics need to run on so that they can last several years on the market with a very small energy source inside the card.

An additional challenge is the enrollment process and we at IDEMIA are looking at several options. Some issuers will have customers that might like to enroll themselves at home while others would rather go to the bank branch so we are going to develop a multi-faceted enrollment solution in order to suit the different types of consumers and market segments.

It is not only about F.CODE and biometric cards which is already a challenge but it is also about the friendliness of the enrollment solution and the versatility of the enrollment solution.

MIDW: It sounds like that would vary greatly depending on the market that you are going to and with payment cards there would be a wide range.

Patrice Meilland, SVP, Powered Cards, IDEMIA: Absolutely. It will depend on the market and even in that market depending on the country or region of the world there is going to be customer segmentation and also the age of the population is driving different behaviors with respect to the familiarity with technology, with smartphones, with biometrics. So, I think even within a given market there will be some segmentation of the market along various parameters so that each of those segments will need a different enrollment solution. And this is the feedback we are getting from some of our banking customers.

MIDW: That makes a lot of sense. Speaking more broadly about financial services and payment initiatives a big part of this is IDEMIA’s partnerships within the industry both the biometrics industry itself but also the payments industry and financial services, what are some of IDEMIA’s key financial services partnerships and how are they helping with not only payment cards but wearable technology payments and invisible payments?

Patrice Meilland, SVP, Powered Cards, IDEMIA: For the cards of course, the biometric sensor is one of the key elements of the card and when it comes to that we have been partnering with several leading companies in this field. What we want to do is to always bring the best technology into a product at the most affordable cost which ultimately translates into the price for the end market.

Beyond partners we also need to consider the fact that IDEMIA has a wealth of assets when is comes to biometrics and that gives us a unique position when bringing biometric solutions to the market. Here I am talking about cards but I am convinced that is true for other biometric solutions. It is about partnerships but not only that, it is also about the assets that we develop within our company to bring technically competitive solutions and cost-effective solutions to the market. For biometric cards that is definitely the case.

Mehdi Elhaoussine, SVP Digital, IDEMIA: I can shed some light on the digital front. And before addressing the partnerships, as you may know our traditional customers are banks and other financial institutions. Having said that we are more and more working closely with payment networks. Not only the international brands but also the domestic networks as they need to be similarly enabled for digital payments or identity. In addition, we are expanding to adjacent segments such as retail, private label card issuers, or even transit operators. And to do so we are partnering with wallet providers and an example of that is what we are doing in the UK. We recently introduced ITSO on mobile which is a mobile ticketing service in partnership with Google Pay. So here not only are we partnering with the ecosystem, because ITSO is a smart card ticketing scheme and our partner in the UK. And we are partnering with the wallet provider, in this case Google Pay, and in addition to that we may also need to partner with some Fintech firms to complement our offerings or address some of the local needs. So it’s an ecosystem at play when it comes to digital, and partnering is a fundamental part of it.

MIDW: Fantastic. Staying in this realm of broader payments and financial solutions I’d like to go back to the marketing question that I asked about cards. As you said, IDEMIA has numerous payment technologies and I’m wondering are you finding specific markets are gravitating more towards individual next generation payments technologies – for instance or are certain markets more enthusiastic about invisible payments while some are more excited about smart cards or wearables?

Mehdi Elhaoussine, SVP Digital, IDEMIA: First of all, the first consideration is whether it is on paper, plastic or digital, it is very important to note that payment means are additive. So, we are not introducing new payment means to replace the previous generation, as they are often coexisting. In this context our goal is to adapt to consumers who are seeking for new ways to pay that are both secure and convenient. To that end we apply a combination of technologies which could be encryption, which is actually the smart card technology, it could be tokenization or even biometrics, and that is how we achieve this mission.

What I am saying applies both to the card and to digital form factors. For example, when we deploy a payment card on Apple Pay it is encrypted onto a secure element on the device, the payment card number is tokenized so we actually provision an alias, and on top of that to validate your payment you are using Touch ID as a biometric factor to authenticate yourself.

But what my colleague Patrice is doing is essentially the same because on the plastic you also have a smart card and we can also make use of tokenization – this is the context of the dynamic CVV, which is a three-digit token used to protect sensitive information for online payments – and last but not least we are now introducing biometrics technology directly into the plastic. So, we have in hand a set of technologies that we apply on multiple form factors which could be plastic, digital or wearables.

MIDW: It does make sense that they all have that core relationship with each other, security vs. convenience. IDEMIA’s flagship concept of Augmented Identity is applied across every vertical that the organization is involved in and I’m wondering how does it fit into the future of payments technology and what role do you see IDEMIA playing in the financial space over the next five years?

Patrice Meilland, SVP, Powered Cards, IDEMIA: When it comes to cards it is actually security and convenience rather security vs convenience. What we try to do, whether it is in the digital world or the physical world, is to increase the security while at the same time increasing the convenience. So, the F.CODE card is a good example as contactless payments are very popular, they are frictionless and people are getting used to it and loving it. When it comes to contactless payments, we bring security with biometry and when you pay with a contactless biometrics there is no reason to have a ceiling on the payment. You can remove the $20 or $30 barrier. It is really about security and convenience.

When it comes to payments, when we use biometrics there is of course a dimension of authentication which extends to identity. You can think, as an example, that an F.CODE card could let you pay, but it could also enable you to get into a building as it has your biometrics and could therefore be used for access control. So, in this case it is a form of identity which is authenticated and lets you go into a building and at the same time while you are in the building you can buy a coffee at the Starbucks or whatever using the same card. So, it is what we call Augmented Identity at IDEMIA which is the ability to provide multiple information from a variety of parameters, be it biometrics, for using the device as a form of identification. We try to increase all knowledge and security that goes together with your identity. So, when it comes to the F.CODE it has the ability to be a card not only for payments but for other usages as well, based on the fact that your biometry is unique and defines you as the only legitimate owner of that card, unlike a PIN which can be given to somebody or stolen by somebody.

Mehdi Elhaoussine, SVP Digital, IDEMIA: To add to what Patrice said and the question of Augmented Identity: when you look at what we do whether it is accessing the connectivity of the mobile network, issuing or authorizing a payment, or even crossing a border, at the end of the day it has to do with identity and what we call Augmented Identity. We do see convergence between payments, mobile and identity, and we believe that IDEMIA is in best positioned because essentially, we operate at the crossroads of those three segments. So, when we apply the technology to banking, the challenge today for financial institutions in digital banking is to onboard the customer, verify its identify in a branch, in the field or even remotely when using his smart phone in mobility or a computer at home. To do so we would have to use a variety of methods – to authenticate an ID document, checking a biometric factor and inquiring other external sources of data.

So, you see we apply identity to banking the same way we have many of our mobile operators, which are now introducing payment means, and that is where we believe we are unique in this industry.

MIDW: Speaking in specifics, we are currently undergoing our 2018 YIR survey at our sister site FindBiometrics and I’m wonder what are some highlights from IDEMIA’s 2018 in the areas that we have spoken about today specifically in payments, payment cards, and next generation payment technology?

Patrice Meilland, SVP, Powered Cards, IDEMIA: So, certainly when it comes to biometric cards we have been the first and only company so far to have received certification from an international scheme on a biometric card, and that is public information – and as a reminder it was with Mastercard and the F.CODE version. We have also announced multiple pilots across Asia with JCB in Japan, across the Middle East with Fransabank, and more recently in Europe with Société Générale as you pointed out. So, the highlight for this year is certainly two-fold: in terms of our product it would be readiness and in terms of product acceptance by the market it is more than acceptance, it is real excitement as our customers are very eager to try out this new technology and ultimately to roll it out. So, for me that summarizes 2018 for F.CODE cards.

Mehdi Elhaoussine, SVP Digital, IDEMIA: And on my side Peter, now that the technology is known and proven our objective is to now scale and put that technology into the hands of millions of customers. Just to give you some order of magnitude, let’s start with the digital payment side. We have digitized tens-of-millions of payment cards to major mobile wallets over the last three years and if you look at the past 12 months 1 in 20 cards issued by IDEMIA is now in the digital format.

When it comes to the use of biometrics in the field of banking: in Brazil we are now managing a biometric database which has tens-of-millions fingerprint records to give access to a range of banking services.

MIDW: What can we expect from IDEMIA in 2019?

Patrice Meilland, SVP, Powered Cards, IDEMIA: When it comes to F.CODE cards we can expect both significant volume rollout for those issuers who were the first to adopt and try the card during 2018. And as well we can expect that the demand to try out this technology among issuers with increase. I really see 2019 as a turning point in the direction of increased volumes and  rollouts and at the same time, increased acceptance.

Mehdi Elhaoussine, SVP Digital, IDEMIA: And on the digital side, when it comes to innovation and cooperation, we will continue to innovate. How do we apply biometrics for payments, in particular in stores? You mentioned earlier about frictionless and invisible payments, we are actually using what we call the Smile & Go solution which is using the smartphone and relying on face recognition to facilitate in store payments.

Coming back to the tokenization topic from earlier, as you may know there are different methods to pay online. The card could be on file in the guest checkout or even loaded in a digital wallet, you may also have a method using ACH and the bank account to trigger the payment. And we believe that in order to secure the credential you should expect the proliferation of tokens that will be produced in an attempt to reduce the exposure in online commerce. And that’s where, in the next 12 months, we will try and expand our reach, not only in payments but also to bank account tokenization. So that is what is in store for 2019.

MIDW: That is extremely exciting and congratulations on all of your successes in 2018 and we are very excited to see what is in store for 2019. Thank you for taking the time to speak with me today Patrice and Mehdi.