China’s Payment & Clearing Association has released its first guidelines on facial recognition payments, covering user approval and processing and storage of biometric data, writes Caixin Global.

In emerging markets such as India and China, biometric payment terminals are gaining popularity, with global transaction values projected at $254 million in 2024 compared to only $84 million in 2019.

The new regulations require businesses to encrypt facial image data and store it separately from information such as bank numbers and other personal data. Merchants and other entities that acquire the transaction are not permitted to keep details on the facial image.

According to Wang Xinyue, a senior partner at Beijing law firm Anli Partners, financial institutions in the country should enter into agreements with merchants to prevent intermediaries from keeping biometric facial images, give customers the option to accept or reject facial recognition-enabled payments and clearly describe the service agreement.

But authentication should not be based solely on facial prints, the guidelines say. Multi-factor authentication can be implemented for additional protection, depending on the risk. If institutions fail to check identity properly, they must provide a mitigation system and the budget for risk management, insurance and emergencies.

Street vendors also accept facial recognition payments in China but the technology is still not governed by the law. For the time being, Wang believes that self-regulation is a great choice, because an industry agreement will help promote innovation and avoid risk.

The first Chinese companies to launch facial recognition payments were Tencent and Alibaba Group, which currently monopolizes the mobile payment industry for third parties in China.

Sources in Caixin claim tencent and the government-owned China UnionPay have collaborated on a project to pay for facial recognition.