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Cashless pocket money: how can biometrics better protect prepay cards for children?

graphicstock portrait of a young woman doing shopping online and holding credit card in her mouth while sitting in the living room at home SuS3sttTl - Global Banking | Finance

By Vince Graziani, CEO, IDEX Biometrics ASA

For many of us, our first experience of money came from the pocket money we received as children or through gifts from family members during the holidays. This money would then be eagerly stashed in a piggy bank to save up for the latest toy or treat. While the average UK weekly pocket money of £7.55 may be significantly more than many of us got when we were growing up, the main motivation behind the payments – parents wanting their children to understand the value of money – remains.

However, as we move closer to becoming a cashless society, many time-honoured habits and traditions around money are changing. Today, children are just as likely to receive their pocket money in the form of prepaid payment cards as through cash. Introducing children to the banking experience at an early age.

Learning money skills for life

Such technology is helping make managing money more relevant for children of the 21st century. So much so, that it is thought that almost one-in-three (31%) parents now pay pocket money digitally, with payment mechanisms specifically designed for children such as GoHenry and RoosterMoney proving especially popular. Launched within the past few years, these colourful cards are already being used by millions of children to learn lifelong money skills.

Both companies offer prepaid top up cards which allow parents to transfer money securely into a dedicated account for their child. Here they can set spending limits through an app and even assign exactly where their child is allowed to spend it. No more teeth-rotting sweet shop splurges for the youth of today.

The first cashless natives

There is no doubt that as well as being an effective way of distributing money, prepaid top up cards are also an excellent tool in helping young people learn how to manage their money in a way that we have not seen before. They allow parents to educate, motivate and empower their children financially so that they have the reassurance that they are fully prepared for a cashless future.

As we become increasingly cashless, parents are finding it harder to make money tangible for children. However, there is no turning back. The children of today are the first cashless natives. Research from GoHenry shows that card payments in store account for more than half (53%) of the spending by children on its prepaid cards and online transactions make up an additional third (33%). The withdrawal of cash adds up to only a paltry 14% of all transactions.

Better security is required

As young people take their first steps into the world of banking and payments, it is important that their accounts are safe from potential fraud or hacking. Unfortunately, this is not always the case. Passwords are increasingly recognised as being ineffective as an authentication mechanism. This is because, as the number of passwords we are forced to remember increases, general password hygiene continues to go down. It is simply not possible to remember multiple credentials. Therefore, the same passwords and PINS (yes 1234, 0000, qwerty and password1 we are looking at you) are used time and time again.

Whilst the use of prepay cards for children makes a lot of sense, they still face a significant hurdle. Namely, a lack of personal verification that links a user to their card. This unfortunately causes fraud to be rife. Therefore, a more secure form of prepaid card is needed that maintains their convenience but protects impressionable children from the potential of misuse and fraud. Instilling a sense of confidence and safety among children on their first tentative steps into the world of banking.

An additional layer of authentication

To make prepaid cards less susceptible to misuse, it is important that payment authentication becomes inbuilt to protect the user. The best way to do this is to ensure verification happens before a transaction is even begun ensuring that the prepaid card is completely, undeniably attached to the users’ identity.

A technology we are familiar with from our mobile phones, fingerprint biometrics provides a valuable additional layer of authentication onto prepaid cards and increases security and confidence for those that use them.

With the user simply having to touch their finger to the sensor, authentication is fast and more convenient than traditional cards with PINS and passwords. They also deliver end-to-end encryption which means that they are not only impervious to fraud, even if stolen – ensuring the child’s data is protected without fear of it being found and misused.

Ensuring peace of mind

Our world is changing. It is important that children are fully prepared for the digital economy and the continued rise of a cashless society. There is no doubt that prepaid cards for children is a positive way to channel pocket money and exposes young people to adult transactions in a controlled, inclusive, and manageable way.

With the addition of fingerprint biometric sensors, these digital piggy banks become far more secure without compromising their convenience. So children can develop some all-important financial independence and parents can have peace of mind.

Global Banking & Finance Review


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