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Facial Recognition - The Future of Mobile Payments in China

Posted in Business on October 16th 2018

With the popularity in China of mobile payment platforms such as WeChat Pay and Alipay, QR codes can be found almost anytime, anywhere in Chinese daily life. From luxury shopping centers to street vendors, consumers can make payments easily by scanning a QR code with their smartphones. The awkwardness of forgetting your wallets at home no longer exists. As long as you have a mobile payment set up on your phone, you can virtually always go cashless in China.

But... things are changing as we speak. QR codes are just a step in the evolution of mobile payment technology and they may soon be a thing of the past. In fact, soon people in China may be able to forget about QR codes, and pay with virtually nothing but... themselves. This new payment method we are talking about is facial recognition, which has been implemented by WeChat Pay and Alipay in various industries. How does this new technology work? Let's find out!


China is leading the way in facial recognition technology

Image via Acart

Over the last five years, foreseeing the significant growth of facial recognition in China, tech giants such as Alibaba and Tencent have made many huge investments in this sector.

Last year, Alibaba closed a US$227 million deal with SenseTime, an AI startup company specializing in facial and image recognition technology. Megvii, the creators of Face++ technology, also raised US$460 million in a series C funded by Ant Financial and Foxconn Technology Group.

In the meantime, Tencent has launched its own AI platform called Youtu, offering basic image and facial recognition capabilities for free. Youtu platform can be accessed via WeChat Mini program, allowing users to recognize faces, images, and texts in various contexts.

The global facial recognition sector is a billion USD-worth market now and is poised to reach US$7.1 billion by the end of 2025. So, how does this technology work exactly?


How does facial recognition work?

Using a series of algorithms, facial recognition technology works by scanning your face using a digital camera, analyzing it based on a variety of physical traits. Using this analysis, the system can create a faceprint - a unique code of individual face, which is stored and accessed through an identity database.

Facial recognition software often includes a “liveness test”, where it requires the users to shake their head slightly when analyzing the face. This prevents users from simply holding a photo to foul the camera. So how is this technology applied to real life?

NB: The system behind facial recognition is, as one may imagine, quite complex. If you are curious about how this technology works, a detailed explanation of the operation of facial recognition can be found here.


Applications of facial recognition in various industries in China

In the West, we have started to see facial recognition being used more and more often by Smartphone manufacturers, but in China, this technology has been pushed to a whole new level. Funded by tech giants in China such as Alibaba and Tencent, facial recognition technology has been applied for various purposes such as payments for products and services. We have gathered some of the most notable examples of how this technology has been implemented, dividing them by industry, to showcase the potential this technology holds and unveil what we can expect from mobile payments in China in the near future.

Let’s dive in.


Fashion Stores

Last Christmas, two Danish fashion brands, Jack & Jones and Vero Moda, opened their smart stores in Shenzhen and Guangzhou, applying Tencent’s facial recognition Youtu all along the customer journey.

The facial recognition system will record the shoppers’ face identity and register them as a member of the “AI Club”, powered by WeChat Pay. Then, at the checkout counter, customers can simply scan their face, and have their WeChat Pay account charged to complete the payment.

Image via Jing Daily


Restaurants

Another facial recognition project rolled out by Alibaba last year was the partnership with KFC stores in Hangzhou to debut the "smile to pay" service. Thanks to this facial recognition system, customers can now order their KFC meals by smiling in front of the self-serving screens. Then, by adding a phone number and scanning their faces the customer’s identity will be verified before proceeding with the payment.

Image via CNBC, Getty Images


Supermarkets

Besides Tencent and Alibaba, JD.com is also leveraging facial recognition in its chain of unmanned stores in China. As the name suggests, there is no staff in the store, but only shelves of products with digital price tags providing updated price discounts and offers in real time. Customers can buy everything from the stores by picking up products and walking through the "smart payment lanes" to check out. When entering the store, the smart cameras will bind your face to your payment information, so that you will be able to pay automatically by simply walking out of the store. So far, JD has opened around 20 unmanned stores across China and has launched its first overseas store in Indonesia in August.

Image via JD Finance


Banks

Facial recognition has also been adopted by several banks in China, including the Agricultural Bank of China and China Merchants Bank with thousands of ATMs placed across the nation. With these ATMs, customers can withdraw cash by scanning their face, without the need for a bank card or even a mobile phone. Thanks to this new technology, the money withdrawal process becomes much faster and more convenient.

Image via Yicai Global


Hospitals

Last month, Jiangxi Provincial People's Hospital has become China's first hospital to offer medical bill payment using facial recognition technology. First-time users are required to input their ID number to create a new profile, which will be stored in a database and retrieved during the facial recognition process. After the system recognizing the users’ face, phone number needs to be provided for further security purpose to complete the transaction.

Image via Xinhuanet

Bonus - Beyond payments…

While not strictly related to payment, facial recognition is also taking over other aspects of everyday life in China. This is just a couple of examples of how facial recognition will be more and more present in our lives.


Airports

Shanghai Hongqiao International Airport has just become the first airport to introduce automatic clearance system using facial recognition system. Developed in 3 years and now available at eight security checking machines at the airport, the new automatic clearance system can provide unassisted passenger check-in, luggage check-in, security check, and boarding. With facial recognition technology integrated, the security check process can be completed in about 12 seconds. During the rush hour, the system can handle up to 2000 passengers per hour, which is a huge improvement compared to the traditional procedures.

Image via SCMP


Hotels

In the early July of this year, the world’s largest hotel chain Marriott International has partnered with the Chinese tech giant Alibaba to launch the facial recognition software for hotel check-ins. Marriott facial recognition check-in kiosks, placed at two locations in China, will be able to scan and identify the guests’ faces, then match it with their reservations in the system and check them in. Thanks to the new system, the check-in times can be reduced from three minutes to one.

Image via Hotel News Resource


Conclusion

Facial recognition is going to disrupt the Chinese digital payment ecosystem. With facial recognition, customers can complete transactions without any cash, bank card or smartphone. As more and more industries including retailing, banking and hospitality have started to apply facial recognition, we can foresee that this advanced technology will be growing rapidly in the near future, replacing traditional digital payment methods. Say goodbye to QR codes and get ready to enter the facial recognition era.



About the author


Yoan Rigart-Lenisa

CEO and Co-founder of IT Consultis

Yoan is a serial entrepreneur with 10 years of experience in China and founder of various successful ventures in the digital, consulting, and F&B industry. Yoan is the CEO at ITC, as well as a member of EO (Entrepreneurs' Organization). He started building companies from scratch to follow the footsteps of his grandfather, who he considers his inspiration and source of motivation. He is a strong promoter of Corporate Social Responsibility, and he is always driven by his values and ethics.