In 2018, Mihai Draghici was visiting his grandmother in Bucharest when he conceived the idea of introducing facial recognition payments to the city.
"I had something to eat at a cafe and the waitress asked me how I wanted to pay, 'cash or card?'" he remembered. "And I thought, 'why can't you just pay with your face?' It seemed like something I could build technically, so I did."
A serial entrepreneur, who has founded over 25 companies in his career, Draghici set to work. Since 2019, his fledgling biometrics payments provider PayByFace has been tested in more than 50 stores across Bucharest, from salons to pharmacies, restaurants, and even Uber and Bolt taxis.
With a new influx of investment from strategic partners such as Mumbai-based fintech SafexPay, PayByFace is preparing to launch in India and the United Arab Emirates, with upcoming pilots in Hyderabad, Mumbai, Delhi, and Dubai within the next two months.
Draghici claims that the convenience and simplicity of facial recognition payments — a method which requires users to first upload a photo to a payment provider and then scan their face at the point of sale — makes it attractive to consumers.
"From all our experiments and pilots in Europe, we have seen that approximately one out of four customers will try paying with their face at least once, if given a proper incentive and benefit to do so, and from the people who try it once, there is an 80% chance that they will use it again and again," he said.
Across the globe, the coronavirus pandemic prompted a
The major global card networks are also eyeing this emerging market. PayByFace has partnered with Mastercard, which launched its own 'smile to pay' pilot in five supermarkets across São Paulo in conjunction with Brazilian provider PayFace. Visa has already teamed up with Californian fintech PopID to trial facial recognition payments in Costa Coffee chains, Géant supermarkets, and various hotels, restaurants and bars in the UAE.
Mastercard representatives say Brazil is a significant market, and its interest in biometrics technologies stems from a desire to improve security and a better consumer experience. The card network pointed to a Harris survey conducted this year in which more than two thirds of respondents agreed that biometric authentication was more secure than either PIN codes or passwords.
However, it remains to be seen how facial recognition payments will be received in western markets.
In China, Guangzhou-based data mining company iiMedia Research found that more than 495 million Chinese facial recognition payments occurred in 2021. However even though Chinese consumers tend to be considered relatively compliant, there have been reports that users are concerned about the security of the payment method and suspicious of how it works.
Rita Matulionyte, an academic at Macquarie University who researches the legal landscape surrounding facial recognition technologies, predicts that some markets will be more receptive to facial biometrics than others.
"I believe the adoption and success of these technologies will differ from country to country, and will depend on local culture and local laws," she said.
One of the main question marks surrounding facial recognition has always been how accurate the technology will perform in real-life settings, along with the risk of mistaken identity. Even Apple, which has supported facial recognition in its iPhones since 2017, warned users to
PayByFace claims its solution to be 99.6% accurate, with Draghici explaining that rather than looking up each user in a central database of faces, the technology uses geolocation data to scan a subset based on the user's proximity to the merchant location.
"It would be pointless to scan users from around the world when you simply need to buy a cappuccino on a street in Bucharest," he said. "Instead, we would just try to match you amongst the set of other active users within a 20 kilometer radius of that coffee shop, and thus the accuracy goes much higher and is much faster and much more scalable."
Mastercard representatives said that its zero-liability policy protects consumers against errors and fraud. In addition, the card network explained that secondary biometrics could possibly be used to minimize the risk of mismatch.
However, the issue of data privacy still remains a major concern, particularly with the involvement of multiple third-party providers. Matulionyte said that there is likely to be a need for international standards which are approved and enforced by governments.
"Laws in some countries might need to be reviewed to ensure that consumers get all relevant information about these payment methods, and especially their risks," she said. "Laws might need to impose restrictions on how personal data could be shared among different stakeholders. This issue should not be left purely for the payment company and the consumer to agree, as consumers either do not understand the contractual provisions or cannot realize their potential impacts."
