Mastercard and Visa are using facial recognition technology whose algorithm is sourced from SenseTime, one of the Chinese AI firms that have been blacklisted by the US government, according to a new Reuters report.
The technology comes by way of Japan Computer Vision Corp (JCV), a firm owned by the massive conglomerate SoftBank, through its wireless business unit. JCV says there is nothing untoward about the arrangement; it is simply sourcing an algorithm from SenseTime that has been integrated into its own software platform, which it is now offering to a range of partners including Uniqlo and Aeon Co. JCV insists that SenseTime has no access to systems operated by Mastercard and Visa, nor can it access their data.
What’s more, JCV says that it submits its technology to cybersecurity audits by CYE, an Israel-based third party.
It is not yet clear how Mastercard and Visa are using JCV’s platform. Responding to Reuters, however, Mastercard referred to European Union data protection standards that apply to all of its biometric checkout partners, suggesting that JCV’s solution is potentially being used in its recently unveiled naked payments concept.
Mastercard’s Biometric Checkout Program is meant to enable shoppers to link their payment accounts to their biometrics, allowing them to pay for goods and services with a face scan. It’s only just getting underway, starting with a pilot program in Brazil, in partnership with the St Marche supermarket chain and Payface, a Brazilian startup specializing in face-based payments.
In its announcement of the Biometric Checkout Program in May of this year, Mastercard asserted that it was working with multiple biometric technology partners, including Aurus, Fujitsu Limited, PaybyFace, the American startup PopID, and NEC – another Japanese tech company. JVC was not named as a partner.
Not is it clear how Visa is involved with JVC. For its part, the payments giant told Reuters that it is currently working on establishing standards for the use of biometrics in payments.
In any case, Reuters reports that JVC is “thriving” by offering its biometric platform to the likes of these companies. SenseTime, meanwhile, told Reuters that its aim is to strengthen its relationship with JVC, adding that it had established “an ethics council” to develop its own standards.
‘Absolutely the Best’
It will be interesting to see how SenseTime’s ethics council will weigh in on its activities within China. Among other China-based AI firms, the company has been accused of providing technology used in the government’s invasive surveillance apparatus in Xinjiang, a province populated by a large minority of Uyghur Muslims.
The oppressive treatment of the Uyghurs is what landed SenseTime and select compatriots on a US blacklist under the Trump administration, which prevented US companies from selling their technology to SenseTime. Under the Biden administration this past December, further restrictions were implemented that would prevent US companies from investing in SenseTime.
JCV does not appear to have violated any US sanctions, but given the political turmoil around SenseTime, one might wonder why it would bother sourcing its facial recognition from this particular vendor. The answer is that “SenseTime’s algorithm is absolutely the best,” JCV CEO Andrew Schwabecher told Reuters, adding, “we’ve evaluated almost every one.”
That assessment would seem to jibe with the massive investments in computer vision technology that have been seen in China in recent years, as noted in a recent ID Tech column. Nevertheless, Schwabecher acknowledged to Reuters that he expects other companies to advance to SenseTime’s level in the coming years, and said that he expects JCV to eventually offer alternatives to the SenseTime algorithm.
‘Show Me the Incentive, and I Will Show You the Outcome’
Is SenseTime’s algorithm as good as Schwabecher says? JCV insists that the algorithm has earned a high rank even in the US government’s own testing programs. But it’s worth considering the state of finance when considering the reasons for JCV’s use of the technology.
As Reuters notes, SoftBank founder Masayoshi Son has argued that his firm’s venture capital investments into various tech companies are aimed at fostering synergies. To offer a hypothetical example: With SoftBank’s backing, startup A has the fuel to do even more work developing software used by startup B, which itself can leverage SoftBank’s resources to escalate its own activities supporting startup C. A rising tide lifts all ships.
That may be a compelling investment strategy, but it also establishes certain affinities between the companies in SoftBank’s ecosystem. As aforementioned, SoftBank owns JCV. It is also the biggest investor in SenseTime.
As CEO of SoftBank, Masayoshi Son – who infamously backed the scandal-plagued real estate startup WeWork – will want both companies to succeed, especially now, with the tech bubble having burst and a wide range of VCs seeing their investments continue to lose money.
Perhaps SenseTime’s algorithm really is the best in the business, or perhaps JCV’s leadership see it as their best option for other reasons. An important question going forward will be, what’s the best option for Mastercard and Visa?
July 8, 2022 – by Alex Perala