Project Management Institute

Face Race

Chinese Companies are Already Using Facial Recognition as a Method of Payment

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While daily use of facial recognition in much of the world is largely limited to unlocking iPhones, Chinese companies have already put the technology to widespread use as a method of payment. From KFC to vending machine manufacturers, project sponsors are pushing initiatives to integrate the next-gen technology into more everyday transactions. “In China, facial recognition has developed into a fairly mature state and will likely be adopted as a standard feature for cashless transactions in the future,” Zheng Qingzheng, an analyst with Suning Financial Research Institute, told The Wall Street Journal.

—Zheng Qingzheng, Suning Financial Research Institute, to The Wall Street Journal

The rollout of these facial-recognition payment projects has mainly been a race between Ant Financial Services Group and Tencent Holdings, the two largest mobile payment networks in the country. They respectively operate Alipay and We-Chat Pay. Taken together, the two networks handle almost 90 percent of China's third-party mobile payment market, according to BigData-Research. Ant was the first to finish its project to adopt its facial-recognition tech for payment, in December, followed closely by Tencent wrapping up its WeChat Pay transaction tech in March.

Tencent's initiative has, at its core, the strategic decision to integrate facial-recognition transaction capabilities into its already-popular WeChat instant messaging app. That means keeping everything in the native app, making it convenient and natural for users to make the leap to facial-recognition payments on a service they already use daily. “Typically as a Chinese consumer, you are going to use WeChat on a regular basis, and the payment function within the app is much more common and normal for people,” Zennon Kapron, founder of Shanghai-based consultancy KapronAsia, told Forbes. In contrast, the main challenge for Alipay is to connect to consumers, he said.

For its part, Alipay has approached merchants and retailers with subsidized partnership deals, pledging to spend CNY3 billion on smaller initiatives to get the tech up and running and offer rebates to customers who use it. Only time will tell which project will realize the most benefits, as facial-recognition payments continue to spread.

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