A SoftBank-owned company is thriving by providing face-recognition technology to Mastercard and Visa. It was fueled by a blacklisted Chinese firm, an opportunity for the Japanese conglomerate fraught with geopolitical and privacy risks.
Japan Computer Vision Corp (JCV), which is owned by SoftBank Group Corp wireless unit, has struck payment deals in recent months.
Therefore, this could pave the way for SoftBank founder Masayoshi Son’s dream of driving new business through collaboration among his tech investments. If JCV continues to grow, it could become a model for SoftBank creating synergies with portfolio companies. It is a key part of Son’s sales pitch to the tech industry.
However, the surge is fraught with danger because of the facial-scanning system it offers to U.S. heavyweights Mastercard Inc and Visa Inc. It is based on technology from SenseTime Group, a Chinese firm blacklisted by the US over human rights concerns.
SoftBank is treading carefully in China
The JCV-SenseTime collaboration exemplifies SoftBank’s difficult balancing act. Moreover, Son attempts to position his conglomerate as a neutral player even as tensions rise between two key markets, the United States and China.
Last month, the billionaire stated that SoftBank is treading carefully in China due to a regulatory crackdown that has roiled its portfolio. JCV claims to keep SenseTime and the credit card companies at arm’s length.
The Chinese company is a technology partner with no access to Mastercard or Visa’s systems or data.
Mastercard stated that all of its biometric-checkout programme partners must adhere to European Union data protection standards. Visa stated that it is working to define the use of biometrics in payments.
It believes that such technology can aid in the security of the system. As facial-recognition technology becomes more widely used, regulators and consumers are concerned about privacy.
With the end of a lock-up period following its initial public offering, SenseTime’s shares fell 50% last week.
According to Reuters, SenseTime intends to strengthen its partnership with JCV. As it believes will benefit businesses, and the company has established an ethics council to ensure standards are met.
JCV claims that its technology is audited by a third party. Thus, Israeli cybersecurity startup CYE is to check for data leakage risk, and that the company asks users to opt in to pay-by-face systems and allows them to opt out.
“Offering those controls to the consumer is really what’s required to make this a very mainstream technology,” JCV CEO Andrew Schwabecher said. SoftBank did not respond.
EVERY DAY, ONE MILLION PEOPLE
SoftBank’s largest investor, SenseTime, was placed on a blacklist in 2019. Thus, preventing American companies from exporting technology to the Chinese firm.
A December blacklisting prevents American investment in SenseTime. Furthermore, Washington accuses the Hong Kong-based company of developing facial-recognition technology capable of identifying ethnic Uyghurs.
Hence, there is no evidence that JCV is violating any restrictions. Therefore, the use of SenseTime technology demonstrates the limitations of US blacklisting in stifling the growth of Chinese technology.
JCV also sells body temperature scanners to retailers such as Fast Retailing Co’s Uniqlo fashion chain and mall operator Aeon Co, who use the technology. In Japan, it has shipped over 20,000 devices that scan over a million faces per day.
JCV has created a software platform to run the SenseTime algorithm. It performs well in the United States government’s own tests due to its low error rate.
The system is managed by JCV from Japan. The SenseTime algorithm creates a digital key by analyzing over 200 facial locations and the distance between them. JCV saves the unique signature to the cloud, enabling users to authenticate payments with their faces.
Other companies, according to Schwabecher, will likely catch up to SenseTime, and JCV plans to offer alternatives on its platform in the future.
The adoption of facial scanning technology would enable greater personalization of services. Hence, from targeted advertisements to offering customers their favorite burger at a restaurant or recommending a destination when boarding a taxi.
However, consumer concerns about data privacy pose a barrier to wider adoption. Even though proponents claim such technology is more secure and convenient.
Regulators have taken action against facial recognition companies, with Clearview AI.
It is based in New York, fined in the United Kingdom and Italy for scraping online images to train its face-matching tool.