Published on the 03/09/2024 | Written by Heather Wright

Study shows willingness to trial facial recognition payments, with caveats…

Facial recognition technology may often raise concerns among consumers over privacy, but when it comes to using it as a payment technology, shoppers are surprisingly willing to trial and adopt it – so long as certain conditions around privacy and security are met.

A paper from researchers at the Queensland University of Technology School of Advertising, Marketing and Public Relations and the University of Auckland, found shoppers were willing to trial and adopt facial recognition payment technology (FRPT) as long as they had access to information, considered the technology would increase shopping convenience and, importantly, trusted the retailer offering is.

“Participants were also keen if they were offered incentives like loyalty points or discounts to give it a go.”

Offering incentives, such as loyalty points or discounts, also appears to be a winner in luring participants in.

The technology requires shoppers to enrol their payment credentials and biometrics – a photo of their face then scan their face in store to process payments without needing to put their hands in their wallets. It has been touted as being fast, convenient – and perfect for those times when you’re hands are already full, or if you’ve left your wallet at home.

In countries including the United States, biometric payment options are becoming more common. Apple Face ID can be used to authenticate app, music and Apple Book purchases, while Amazon’s pay by palm offering enables shoppers to scan palms to pay at stores including Whole Foods, and locations such as some stadiums, airports and fitness centres.

Dr Shasha Wang, senior lecturer in the School of Advertising, Marketing and Public Relations at Queensland University of Technology Business School and one of the co-authors of the report, says the global facial recognition payment technology market size was valued at US$4.6 billion in 2022 and is expected to grow at a compound annual growth rate of 19.9 percent from 2023 to 2030.

“In China alone, it’s estimated FRPT users have exceeded 760 million since 2022,” Wang says.

AliPay has been an early adopter of facial recognition payments in Asia, with its ‘smile to pay’, and some US restaurant chains – notably the fully robotic CaliExpress by Flippy, which uses PopID’s facial verification – are also harnessing the technology.

Late last year, Mastercard announced it was partnering with NEC to push biometric payments across Asia Pacific.

Mastercard’s biometric checkout program launched with a pilot in St Marche supermarkets in Brazil in 2022 using technology from Payface, a Brazil-based biometrics company. A Mastercard survey of nearly 100 shoppers who enrolled in the pilot showed 76 percent would ‘strongly recommend’ biometric payments to a friend.

But while the QUT/Auckland University study shows shoppers are willing to give FRPT a go,  QUT researcher Professor Gary Mortimer notes some big caveats.

“Shoppers were less willing to embrace FRPT if they were not familiar with the retailer, didn’t consider the new technology useful, or were satisfied with existing payment methods like tap and go or digital payments.”

Being able to trial in a physical store and get access to an ‘appropriate’ level of support and assistance made people more likely to adopt, he notes.

Interestingly, the biggest concern raise was that FRPT might encourage overspending, something Mortimer says can be addressed by introducing an ‘alert prompt’ at a certain monetary benchmark, in the same way credit card providers limit a tap and go payment.

There’s also, of course, the big issue of privacy and security.

The use of facial recognition technology by retailers such as Bunnings, Kmart and The Good Guys in Australia sparked a backlash in 2022 after it was revealed they were using it to identify individuals previously involved in shoplifting or other incidents including violence and aggression towards staff. Both Bunnings and Kmart put their use of the controversial technology on hold while the Office of the Australian Information Commissioner investigated whether they had used the technology without clearly informing customers their biometric data was being collected. The investigation into Good Guys was dropped after they said they had discontinued using the technology and had no plans to reinstate it.

Consumer advocacy group Choice, which prompted the initial investigation into Bunnings, Kmart and The Good Guys, said a year later that the technology was also in use at a number of major concert venues and sports grounds in Australia, including the Melbourne Cricket Ground and Sydney Football Stadium.

In New Zealand Foodstuffs North Island’s trial of facial recognition technology in 25 of its supermarkets, again focused on reducing retail crime, is being closely monitored by Privacy Commissioner Michael Webster.

In April, when he announced the investigation, Webster noted that there is no known other current use of facial recognition technology in the retail sector in New Zealand.

Draft rules for biometrics have been drawn up and consulted on in New Zealand, with the Privacy Commissioner considering feedback and expected to announce later this year whether he intends to go ahead with a code.

The QUT/University paper, published in the Journal of Retailing and Consumer Services, highlights methods identified help smooth any introduction of facial recognition for payments, and strategically segment and target distinct markets.

Those tips include including providing plenty of information on your plans, the convenience it could provide for customers and how the biometrics will be used.

Byron Keating, a professor of services marketing at QUT Business School and co-author of the report, says the study found that customers engaged with several sources of information to inform their intentions to adopt.

“We therefore recommend retailers implement instore signage, point-of-purchase graphics, on-screen videos, update their websites and social media platforms to communicate the benefits of FRPT, if that’s the direction they wish to take.”

Using YouTube to show how the technology works and the privacy measure in place, was suggested by one participant as a way to sway them to accept the technology.

“To attract shoppers, retailers need to stress the convenience of FRPT and really drive home their security and privacy protocols,” Keating says.

“Retailers will most likely have to ensure extra frontline team members are deployed at the trial stage to help customers familarise themselves with the biometric payment technology, while promotional incentives are always going to win over some customers.”

“Our new platform will enable us to provide improved CX and EX from a cost-effective base, and explore interesting adjacencies over the coming years.”