Token Raises $30 Million for Biometric Wearable

Token has raised $30 million in new financing to boost its wearable authentication offering.

The funding, announced Monday (April 24), comes in the form of a $20 million secured note, and a $10 million convertible note from Grand Oaks Capital. According to a news release, it will help support development of Token’s smart ring, a “passwordless, FIDO 2-compliant, biometric wearable” that prevents phishing attacks and data breaches.

“People are the leading cause of data breaches, and you see this play out almost daily as new ransomware attacks are revealed to have been caused by the human failings inherent in legacy MFA,” said Token CEO John Gunn, referring to multifactor authentication.

As PYMNTS wrote last year, MFA is a common anti-fraud tool, but it comes with drawbacks, as these systems require users to enter a secondary validation measure along with their passwords, such as an emailed security code.

“They offer some protection, but this comes at the ultimate expense of adding friction for users,” PYMNTS wrote. “MFA is useful but should be deployed in the right context to avoid unnecessary disruptions.”

And many fraud techniques such as phishing rely on duping victims into handing over critical information such as passwords voluntarily, rendering MFA largely ineffective.

These attacks reached a record high in 2021 in spite of the efforts on the part of financial service and eCommerce firms to educate their customers, with more than 100,000 incidents reported in December alone.

Meanwhile, recent PYMNTS research finds that many consumers consider passwords their least favorite authentication method, even though they remain the most widely-used method of logging on.

The PYMNTS/Entersekt collaboration, “Consumer Authentication Preferences for Online Banking and Transactions,” spotlights the divide between how customers want to authenticate and how they do so when accessing financial accounts and making payments.

That study showed that while 65% of consumers had used a password as their main authentication method, 51% said they would rather be using biometrics.

“But like most habits, traditional password authentication use is hard to break,” PYMNTS wrote earlier this year. “Fast Identity Online, the global digital password-less authentication standard, has been trying to move away from password authentication for over a decade.”

In an interview with PYMNTS, Entersekt Vice President of Solutions Mzukisi Rusi argued that it will take time to undo the decades-old authentication system used by both consumers and legacy FIs.

“As much as we hate it from a security perspective, people still find [passwords] pretty easy,” he said. “They are fairly ubiquitous, and they don’t need any special technology.”