A UK bank is testing a key fob that uses your fingerprint to make payments

Key Points
  • The way people bank in the U.K. is changing, with mobile apps and contactless payments becoming popular. 
  • NatWest's trial of a payment fob that uses biometric fingerprint technology will involve 250 customers. 
NatWest

U.K. bank NatWest has launched a trial of a payment fob that uses biometric fingerprint technology.

In an announcement Wednesday, the bank said 250 customers would take part in the pilot, which will last three months.

The fobs work with current Chip and PIN terminals and will enable users to carry out contactless transactions of up to £100 ($130) by using their fingerprint information to verify purchases, according to NatWest.

Users upload their fingerprint details to the fob, registering their account via smartphone. NatWest claim the fob is no bigger than a keyring and it features a small fingerprint reader.

The trial of biometric fobs follows on from pilots of biometric credit and debit cards earlier in the year.

NatWest said that biometric data was encrypted on the device and would never be shared with either the merchant or bank.

Visa and Giesecke+Devrient Mobile Security have worked with NatWest to bring the technology and service to customers in the U.K.

"Our research tells us that people have a strong interest in biometric technologies which can make their lives easier as well as increasing the security of their payments," Jeni Mundy, managing director, UK & Ireland, at Visa, said in a statement.

In the U.K., at least, the way in which people bank is changing. According to U.K. Finance's UK Payment Markets 2019 report, the number of contactless payments in 2018 hit 7.4 billion, an increase of 31% from 2017.

While there is interest surrounding the development of biometric payment technologies, there are also concerns in some quarters, especially when it comes to privacy and security.

"Biometric payments are increasingly being adopted in markets such as Asia but have yet to see widespread uptake in the U.K.," Saj Huq, program director of the London Office for Rapid Cybersecurity Advancement, or LORCA, said in a statement sent to CNBC via email.

"This is largely due to privacy concerns among consumers about how their personal data, such as fingerprints, is being stored," Huq added.

He went on to state that, despite benefits to the consumer, technologies like biometrics and facial recognition were "not the panacea to fraud."

"In fact, as quickly as they are being developed, hackers are also developing ways to subvert them – there is a whole parallel industry working hard to find ways to beat biometric security methods."