The Reserve Bank has declared controversial Chinese technology could help turn Australia into a cashless and even wallet-free society.
Governor Philip Lowe has praised two Chinese tech giants that have developed facial recognition software that enables customers to pay for goods simply by looking at a camera.
Australians in 2020 have embraced tap-and-go card payments as shops and major supermarkets asked their customers to avoid using cash.
The Reserve Bank has declared Chinese-style technology could help turn Australia into a cashless society. Pictured is a woman in China using WeChatPay to do a transaction
Even before the Covid pandemic, less than a third of Australia in-person transactions were done with banknotes.
With Australia increasingly going cashless, Dr Lowe hailed Chinese payments giants Alipay and WeChat Pay, which have developed facial recognition payment machines.
Reserve Bank of Australia governor Philip Lowe said Alipay and WeChat Pay had led the way in China with new payments technology
‘This influence of the big techs is perhaps most evident in China, with Ant Group (owners of Alipay) and Tencent (WeChat Pay) having developed new payments infrastructure that has led to fundamental changes in how retail payments are made in China,’ he told the Australian Payments Network.
Alipay, owned by 56-year-old billionaire Ant Group founder Jack Ma, has for the past three years spent big on installing facial recognition computers at shops across China.
WeChat Pay has also developed facial recognition software where consumers just look into a camera at a store machine, with their image fed into a database.
The facial recognition software does away with the need to even scan a QR code or tap a credit card on a reader.
While not specifically hailing Chinese facial recognition technology, Dr Lowe saw the benefits of it if American tech giants Apple Pay or Google were the developers of digital wallets.
‘These wallets are clearly valued by consumers and they will reduce industry-wide fraud costs through the use of biometric authentication (e.g. fingerprint or facial recognition),’ he said.
Governor Philip Lowe gave a special mention to China’s WeChat Pay, which uses facial recognition software to save consumers from even having to pull out their wallets if they have an app on their phone or have scanned a QR code
Dr Lowe hailed facial recognition technology just hours after Woolworths told Daily Mail Australia it was trialling cashless stores because inner-city customers were almost always choosing to pay by card.
Since July, nine Woolworths stores in Sydney and Melbourne – including four city centre supermarkets – have trialled a completely cashless system.
Dr Lowe noted Australians had been enthusiastic adopters of cashless payments.
‘Australians were early and rapid adopters of tap-and-go payments and increasingly are using digital wallets,’ he said.
‘There is a road map for the development of new payment capabilities using this fast payments infrastructure.’
The uptake of digital wallets and smartphone payment apps is set to turn old-fashioned notes and coins into a relic of the past.
In November 2019, two months before the first case of coronavirus was confirmed in Australia, cash payments made up just 32 per cent of in-person transactions, down from 43 per cent in 2016, Reserve Bank data showed.
Alipay, owned by 56-year-old billionaire Jack Ma, has for the past three years spent big on installing facial recognition computers at shops across China
Despite that, demand for $50 and $100 banknotes had grown at the fastest pace in 11 years even as Parliament debated legislation to ban $10,000 cash transactions.
When it came to technology, Dr Lowe made no mention by name of Australian innovators like Afterpay, even though it has a share price of $96.60 and a market capitalisation of $27.5billion.
Nor did he specifically mention ZipCo, another Australian financial tech company with a share price of $5.53 and a market capitalisation of $2.9billion.
Dr Lowe did, however, argue the buy now, pay later players had the right to prevent retailers from charging customers a surcharge for using their tech apps so they had time to grow and innovate.
He said the Reserve Bank board was ‘unlikely to conclude that the BNPL operators should be required to remove their no-surcharge rules right now’.
Dr Lowe said Chinese technology had inspired him. Pictured is a WeChat Pay app
When it came to innovation, he hailed American tech giants Google, Facebook, Apple and Amazon.
‘In Australia and many other countries, Google, Apple, Facebook and Amazon are increasingly incorporating payments functionality into their service offerings,’ Dr Lowe said.
‘Mobile wallets such as Apple Pay and Google Pay are the most prominent examples of this in Australia.’
Facebook is development a blockchain payments system as part of its Libra project.
Dr Lowe also mentioned how fintech companies are developing apps that assess a customer’s credit score.
‘In some other countries the big techs are also offering person-to-person transfers and consumer credit products,’ he said.
The Reserve Bank boss, who earns $1,085,463 a year, made no mention of how Australian financial comparison website Finder has developed an app which assesses someone’s credit score and how they can save money on loans and credit cards.
Dr Lowe hailed Chinese-style technology just hours after Woolworths told Daily Mail Australia it was trialling cashless stores because inner-city customers were almost always choosing to pay by card. Pictured is a Woolworths queue in Adelaide last month