China Issues First Industry Guidelines for Facial Recognition Payment
COVID-19 and China
Image credit: Alipay official website

On January 21, the Payment & Clearing Association of China (PCAC) issued the first Industry Self-discipline Guidelines for Facial Recognition Payment. The guidelines outline principles on security management, terminal management, risk management and user rights protection and others.

In terms of user rights protection, the guidelines require members under the jurisdiction of PCAC to establish a consumer complaint handling process, clarify the complaint acceptance department and people in charge. Moreover, companies that provide facial recognition payment services should inform customers of the channels to submit complaints.

Regarding the most concerning issues, such as payment fraud and identity risk, the guidelines require members to deal with disputes and complaints raised by customers promptly. Besides, they need to establish risk provision funds, insurance plans and risk compensation mechanisms. For any loss of consumers, if members cannot prove that consumers themselves caused the loss, the service provider should compensate for the loss in advance.

Facial recognition is a new payment method based on artificial intelligence, computer vision, 3D sensing, big data and other technologies. In 2017, as smartphone manufacturers successively launched face recognition functions, the new payment approach began to roll out in China, penetrating major daily scenes such as supermarkets, restaurants and so on.

China’s mobile payment systems have created a leapfrog from credit cards to a cashless society. In 2018, transactions through mobile payment in China were a stunning CNY 277.4 trillion (USD 40 trillion). In 2019, the number of mobile payment users exceeded 700 million, remaining the highest adoption rate worldwide.

According to an iMedia Research report related to this topic, 2019 will become the first year of facial payment – users have already reached 118 million people. By 2022, the number of users will exceed 760 million and will replace the QR code payment as the primary payment method.

Though believed by some to be potentially even more convenient for consumers than traditional mobile payments, Chinese residents are increasingly voicing concerns about facial recognition. In November 2019, a law professor in east China sued a wildlife park for breach of contract after it replaced its fingerprint-based entry system with one that uses facial recognition. A month later, a US-based AI solution provider, Kneron, fooled facial payment devices run by two payment juggernauts in China – Alipay and WeChat Pay (also known as Tenpay) – with 3D-printed masks.

The lack of an overarching law on facial recognition has let technology companies gain access to a massive amount of data. The considerations of whether it’s legal to use or even collect them should come ahead of the widespread adoption of these applications, not the other way around. 

Editor: Luke Sheehan

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