Korean bank to integrate blockchain, biometrics, IoT payments
Shinhan Card, Korea’s biggest, global top-five credit card company, is looking into blockchain-powered, facial recognition-based payment systems and internet of things financial payments, as the country is trying to become a pioneer of “deviceless” payment systems, writes The Korea Times.
Ryoo Tae-hyun, director of Shinhan Card’s digital first division, said in an interview for The Korea Times that the plan for the upcoming future is to make traditional methods obsolete, and turn to plastic-free and deviceless payments.
“The senior vice president of Visa, who directs the firm’s innovation, came to Korea before the Chuseok holiday and told me that he expects Korea will lead the new payment system before the United States or China,” he said. “Digital payments already account for 16.5 percent of the way our customers make payments. The figure has jumped from 12 percent two years ago.”
If the Korean government is willing to invest in a nationwide infrastructure, Ryoo believes the country will easily be ahead of the game, to the detriment of competing countries such as US and China.
“By the end of September, the Financial Services Commission (FSC) will decide whether to designate our facial payment as an innovative financial service,” he said.
The FSC has established that companies developing innovative financial services will not be affected by financial regulations and are the sole owners of their services for two years after approval.
In August, Shinhan Face Pay was rolled out in cafeterias, coffee shops and a convenience store, and in November it will be tested at universities.
Aware of global privacy concerns, Ryoo assures users that the technology doesn’t breach privacy.
“Unlike China’s facial payment system collecting original images, our system only stores key points of images, so it is free from privacy issues,” he said. “Our Face Pay also features age tracing algorithms that means our customers using the system do not have to submit a new photo for 10 years.”
Shinhan Card received a patent for a blockchain-based payment system in Korea after using the technology to establish a credit transaction service. It applied for patents in the US, China, Japan, Vietnam, Indonesia, and the European Union, and will hear the decision in 2020.
“With our system, we provide our customers with cryptocurrencies available at our affiliated stores, in accordance with their credit limits,” Ryoo said. “Cryptocurrencies developed by other blockchain companies can only be used at a limited number of stores. Ours can be used at a wider range of places, because we have served as a platform for our customers and affiliated stores for over the past 30 years.”
Ryoo believes the mix of blockchain technology with IoT will help get rid of plastic cards sooner than anticipated.
“We installed our payment module in products from Hyundai Motor and LG Electronics,” he said. “Our customers will be able to do grocery shopping with LG ThinQ refrigerators. This means that products themselves become our affiliates. If the nation’s manufacturers pay more attention to cooperation with financial firms, the pace of innovation will be much faster.”
Korea is a true leader in tech innovation and adoption. Last year, Korean credit card companies Shinhan, BC, and Hana Card had announced work on a finger vein-based payment authorization solution. Starting January 2020, travelers to South Korea will use palm vein biometrics for authentication during boarding checks, following a partnership between the Korea Financial Telecommunications and Clearings Institute (KFTC) and the Korea Airports Corporation (KAC).