China migrating towards biometric payments
China's payment landscape this decade could be defined by the migration towards biometric payments. We believe this trend could be driven by macroeconomic and regulatory risks:
- A maturing digital payment market that calls for a new mechanism to further lower payment friction and boost offline transactions;
- Regulatory changes that are forcing the incumbentsto leverage new technology to mitigate risks to their duopoly.
COVID-19 has put a temporary halt to rollouts
Chinese tech companies are looking to biometric payments to lower payment friction, boost offline transactions and convert users from QR-based transactions ahead of the unified QR standard. The COVID-19 outbreak has put a temporary halt to the rollout of the technology, but we believe it has also served as a reminder of the hygiene benefits of automation and digitisation. This could aid adoption when the rollout resumes, in our view.
Early indicators from a UBS Evidence Lab Consumer PulseCheck in April 2020 imply user upside. While consumer concerns over privacy and security can handicap the wider rollout, we believe these challenges will be addressed.