Mastercard and NEC to pioneer facial recognition checkouts in Asia

December 6, 2023

This article was first published on Nikkei Asia.

Mastercard and the Japanese technology group NEC are planning to launch a store checkout system using facial recognition, starting with trials next year in potential markets like Singapore, Indonesia and elsewhere in Asia.

Both see Asia as the first destination for the new payment method, ahead of the U.S. and European markets. Executives cited the region's eagerness to adopt new technology -- more than 80% of Mastercard's transactions there are contactless, including tapping credit cards and using smartphones.

In a recent interview with Nikkei Asia, Karthik Ramanathan, senior vice president of cyber and intelligence solutions for Asia-Pacific markets at Mastercard, said the American payment firm is in the process of partnering with retail companies and "looking to have some pilots next year."  

"As somebody who's based in Asia, looking after the [Asian] markets, I do think consumers in Asia have been at the forefront of testing new technologies," Ramanathan said. "We believe that Asia as a region is ripe for a biometric checkout experience."

Aside from Singapore and Indonesia, he said, Thailand, Australia and Japan are the top markets in the region for rolling out the system. 

In it, customers will first register their profile and a photo of their face using a smartphone. Then at checkout, they will simply look into a standard tablet camera to complete the purchase without having to insert or scan a credit card. Merchants can also limit operational costs through using the system instead of installing cash registers or terminals.  

"If your experience is such that you're going to be expecting a checkout that is seamless, biometric checkout could potentially form part of the process," Ramanathan added. "And the brand... and merchants that offer this will be at an advantage."

The new service will be made possible using a biometric system developed by NEC, which ranks among the most accurate. By incorporating deep learning technology, the system can adjust for different facial orientations and camera resolution and distance.

In Singapore, NEC introduced its biometric technology in 1991 for the country's national identity card. The company later delivered it to immigration checkpoints at Changi Airport, one of the busiest airports for international traffic. In Asia, the system also supports national ID management in Vietnam and India. 

Tetsuya Yukutake, director of digital finance department at NEC, said the company is now seeking to expand the usage of its technology in financial services. In Japan, the system is used for identity verification to open online banking and payment service accounts. 

"We hope to test and launch the service at scale in Southeast Asia -- like Singapore and Indonesia -- and bring our expertise back to Japan," Yukutake told Nikkei Asia. 

Yet, as the use of facial recognition could raise concern over privacy and security, Mastercard has been preparing for ground rules. In May last year, it launched a standard framework that companies must go through, including in-depth security and performance testing. 

The framework, for example, requires that the biometric information that is captured at the time of authentication cannot be stored on the device. "It needs to be deleted right away, so that there's no chance of it being hacked and for the biometrics to be misused," Ramanathan said. 

While the specifications of the checkout system with NEC are still under development, Ramanathan said the service will allow customers choice on where they will use biometric checkout. "We want to give as much control to consumers," he said.  

"You want to make sure that the consumer is always comfortable in adopting new technology and they feel that they are in charge."