- Key insight: Revolut is piloting photo ID payments.
- What's at stake: The financial institution is trying to draw merchants and consumers to its new point of sale system.
- Forward look: Payment experts say Revolut will need to build a network, similar to challenges other biometric payment options have faced.
The London challenger banks this week launched a U.K. pilot for Revolut Pay with Smile, which is linked to Revolut Register, a point of sale device designed for hospitality businesses. The idea is to enable people to make a payment by looking at a facial scanner rather than pulling out a card.
The technology is not new — facial biometrics or "
"Biometric payments can offer further convenience to customers, but they have had many false starts in various different markets and customer demand remains unproven," Zil Bareisis, a director at Celent, told American Banker. "If you already have the latest phone which unlocks with your face, is looking at the terminal that much more convenient than taking the phone out?"
Say cheese
Consumers access "Smile" through Revolut's app and pay by looking at a terminal, without using a phone or a wallet. The method matches the consumer's face against selfie identity checks that are established when the consumer registers for the app. The merchants do not store consumer data, and Revolut supplies encryption to protect the payment through its app.
Revolut said merchants using the facial recognition feature will pay 0% processing fees on transactions, an incentive to draw users. Smile is being paired with Revolut Register, a two-screen device that combines payments, financial services and store management. The hardware also includes a built-in eSIM backup, which the company said is intended to prevent terminals from going offline during connectivity failures.
In an email, Revolut's press office said Revolut Business, the unit that manages the point of sale system and biometric checkout, is a major strategic bet for the broader company and is one of its fastest growing areas. "When we look to build, we do so focusing on specific sectors, understand their daily pressure points, and innovate around what they actually need to succeed," Revolut said.
The company's new POS terminal, Revolut Register, provides the modular hardware and multi-location management software required to serve enterprise hospitality operators, retail chains and high-volume venues, according to Revolut.
"Pay with Smile is currently U.K.-only, but our goal is to always introduce our latest products and technology across multiple markets, though we have no current timelines for rollout in Europe or other markets as we believe it signals our ambition and differentiates us in a competitive global marketplace," Revolut said.
Paying too quickly?
The purported benefits of using facial biometrics to make a payment is speed, and for merchants and payment companies lower processing costs. But concerns over security and privacy, particularly as
Also, some friction in payments is good, according to Bareisis. The act of taking the phone out reassures them that they are making the payment deliberately, rather than potentially by accident, he said.
"The biggest challenge facing anyone looking to roll out a new payment method is the need to build out a new network of merchants that can accept and customers willing to use it to pay," Bareisis said. "Revolut is starting with specific sectors, and it will be interesting to see how quickly they can move beyond pilots into scale deployments."
Facial recognition also requires a special terminal for merchants, consumers have to go through a setup process and acceptance is spotty because the technology's providers don't communicate with each other, according to David Shipper, an advisor at Datos Insights.
"I could go through the process of adding my face at one merchant, but the merchant next door may use a different vendor, so it's not universal," Shipper told American Banker. "Consumer security concerns are also a factor, but that concern will decrease over time, especially if the option reduces friction."
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What will help Revolut's Pay with Smile grow quickly is the 0% processing fees, according to Shipper.
"That is not too expensive in the U,K, where card interchange is very low, but the same offer would cost many times more in the U.S., where interchange is much higher," Shipper said. "Revolut will use this offer as a loss leader to capture the entire merchant relationship and gain non-Pay with Smile transactions, and cap the 0% offer or focus on smaller-dollar merchants, which is a strategy that could work for U.S.-based merchant acquirers as well."
