Citibank terminates S'pore biometric service

SINGAPORE--Citibank's recent decision to discontinue its One-Touch biometric payment service in Singapore, following the withdrawal of its technology partner, was "not surprising", according to an industry analyst.

The bank launched the fingerprint authentication payment service in November 2006, alongside technology provider Pay By Touch, touting it as a way to deter fraud.

Just over a year later, last month, Citibank released a statement noting that Pay By Touch had discontinued its biometric-related services worldwide.

On its Web site, Pay by Touch explains its parent company Solidus Networks, had filed for bankruptcy protection under Chapter 11 last December. After corporate restructuring, the company determined it no longer had sufficient funds to support the provision of biometric authentication and payment services.

Citibank issued letters to its customers and merchant partners informing them of the termination of service.

When contacted, the bank's local office declined to reveal the number of credit card customers who have registered for the service.

However, Citibank's head of credit payment products John Denhof, said in an e-mail interview that under 1 percent of the bank's average monthly credit card transactions were carried out using the biometric payment service. "Almost all of our customers who signed up for the system have used it at some point," Denhof added.

Unfortunate end to "bold" step
Abhishek Kumar, senior research analyst at IDC-subsidiary Financial Insights, told ZDNet Asia Tuesday that the One-Touch initiative was a "bold step" for Citibank, and the termination of the service was "quite unfortunate".

Kumar noted that the bank could have appointed another technology provider to resume support for the service, but it would have been a resource-heavy exercise.

Biometric systems, he explained, and their corresponding recognition algorithms are "patented and specific to each vendor".

For Citibank to continue with the biometric payment service, it would have to engage a new vendor with strong biometric tools capable of supporting credit card payments, replace all enrolment and merchant transaction terminals, re-register all customers for the service, as well as replace current One-Touch applications with the new vendor's applications.

Kumar said: "It is quite a complex and expensive endeavor so it does not surprise me that the bank did not continue [the service]."

Citibank's Denhof did not dismiss the possibility that the service could be reinstated in future. "We have been very encouraged by the take-up on the biometric system and continue to believe in the future of the technology," he said.

Apart from Singapore, Kumar noted, the financial services industry in Korea and Japan also offer biometric payment services but these are few and far between.

Biometric payments currently appeal only to "a niche audience", he said, with the majority of banking customers still preferring more conventional electronic payment methods.

In the case of Citibank Singapore, the majority of biometric transactions involved low-value purchases as the terminals were available at limited merchants such as cafes and CD shops, he said.

"The acceptance of biometric payments will not occur overnight," said Kumar. "Acceptance will only come by educating people and making them understand the increased security and convenience of such a solution."