Scanning a barcode to make payments in China could soon be a thing of the past, as technology giants such as Tencent are now studying the use of facial and fingerprint recognition for such transactions. Most people in China pay using their mobile phones to scan QR codes — a type of barcode system. They do so via the two most popular mobile payment platforms: Tencent’s WeChat Pay and Alibaba’s payments arm Alipay.
“In China, payment methods using QR codes have replaced cash and cards in just five years. It’s possible that in the next few years, new and better products could emerge to replace QR codes,” said Greg Geng, vice president of Tencent’s WeChat Business Group, at CNBC’s East Tech West conference in the Nansha district of Guangzhou, China.
WeChat Pay in August introduced its “Frog Pro” system that allows customers to make payments by simply scanning their faces — without the use of their mobile phones. The technology is now being tested in several retail chains in China and came after Alipay rolled out its own facial recognition payment system, the “Dragonfly,” last year. Asked about data privacy and security, Geng said that working with Chinese regulators to introduce new payments technology means the company will have to comply with any data protection requirements. In addition, the fact that WeChat could process one billion transactions daily means the company has stringent measures in place to protect users’ data — something it would keep up and strengthen, he said. Alibaba Group’s founder Jack Ma previously said the company thwarts 300 million hack attempts every day. He said last month that Alipay, which processes $50 billions of transactions each day, has yet to lose “one cent” to hackers.
Alipay’s Expansion
Alipay has launched a new version of its Dragonfly facial recognition-powered point-of-sale system last year, and plans to spend CNY3 billion (US$450 million) to promote its use in China, according to Yicai Global. The Dragonfly 2 is smaller and lighter than the original, making it portable, according to a Weibo post by Alipay. The device measures two inches less, its thickness has been reduced by a third and its weight by half, and it can be folded to make it the size of a book, the report says. The next-generation 3D camera system in the Dragonfly 2 is more precise and has a wider capture area, and also works in various lighting conditions so merchants do not have to change store lighting.
The new version retails for CNY1,999 ($298.00), which is nearly 30 percent less than the original, and Alipay is offering a range of discounts during the pre-sale period that could reduce the price to as little as CNY1,199 ($179). Part of the promotional budget is dedicated to merchant incentives based on transaction volumes can be worth up to CNY1,200, which Alipay says could make the device effectively free.
Alipay also says the large-scale commercialisation of its facial recognition service has driven the employment of 500,000 people in the industry for research and development, production, installation, and commissioning since last year, and Yicai reports the average salary of staff commissioning and installing face scanners is CNY150,000 to 200,000 ($22,350 to $29,800).
WeChat Pay’s Expansion
The Frog Pro features a 10.1-inch double-sided screen, a 3D depth-sensing camera for the facial recognition payment function and a QR code scanner. The double-sided screen will facilitate pushing promotions, according to the company. The cashier can display the QR code of its official web account in WeChat or new product information on the screen.
China has been quick to embrace facial recognition technology, which is already being used for making payments in supermarkets and checking in at hotels. Payments made through facial recognition are becoming more prevalent as companies integrate online and offline retail as a way to drive marketing initiatives. By rolling out a device equipped with more advanced facial recognition technology, users can enjoy an even more convenient method of paying for goods and services without using smartphones. According to Tencent, the developer of WeChat, the advanced facial recognition technology used will be safer, quicker and more convenient overall.
Alipay, the Alibaba-backed WeChat nemesis, is already ahead of the game as it launched its facial recognition system Smile to Pay as early as 2017. But despite these efforts, WeChat Pay still leads the market with roughly 600 million users compared to Alipay’s 400 million. The Tencent-backed platform processes a billion transactions daily, connecting 50 million merchants and businesses in China.
