Chinese Regulators Put Brakes on Facial-Recognition for Payment

“Say cheese?” The central bank in China says “no dice” — at least for new customers.

Chinese regulators are forbidding banks from utilizing biometric technology to verify new customers’ identities, reports Caixin, until such time as a technological standard is established in conjunction with applicable financial regulations.

As for existing customers, however, banks in China will continue to be permitted to use biometrics such as facial recognition for identity authentication in certain online transactions.

“The regulator has concerns about rushing to permit remote verification or say that it is safe and effective,” said Fan Shuangwen, deputy director of the central bank’s payment department, at a forum on May 24. “As for when it might drop those concerns, I don’t know for sure, and it is hard to set a timetable for this.”

Currently, in China, a customer must physically appear at a bank to have his or her identity verified by an employee before he or she can open an account. There is a push in the industry, the report points out, for facial-recognition software to replace the need for a customer’s physical presence to conduct banking business.

As the Caixin story notes, Ant Financial Services Group — an Alibaba affiliate — recently rolled out its “smile to pay” technology, which allows users have their faces scanned instead of having to enter a password to make an online payment. The firm is looking to expand facial recognition to its mobile payment services as well.

As financial institutions rush to develop these user-friendly forms of consumer authentication, the main concern in biometrics for identification is in how the data is transmitted. This highly valuable biometric information is most vulnerable to breaches by hackers while it is being transmitted between sources.

Chen Zhong, a digitalization expert at a research facility under Peking University, stated at the aformentioned forum: “The current methods of Internet transmission are indeed very vulnerable to hacker interception and duplication. So the risk is severe when using (biometrics) in financial services.”

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