Square and fed

anthonyms wrote regarding Fed getting into instant payment space:

1) I don’t see this as a threat to Square or any processors etc for a couple of reasons:-
1.1) I think this is aimed at the underlying banking system interbank settlements level rather than merchant end processing
1.2) Isn’t there a law that prevents Fed from competing with pre-existing private enterprise (in the same sense that IRS couldn’t introduce a free tax simplification software that is desperately needed because it would mean that it directly competes with private enterprise - in this case turbotax).

2) I think before this event even comes about we will see technology disruptions. I’m on the way back from China where effectively I have seen the potential future disruption. In mainline retailers (e.g. chain supermarkets not mom & pop shops), we have moved on from where Square and PayPal’s izettle and Wirecard plus all other POS terminal type processing devices and systems operate as well as beyond digital wallet based systems like apple wallet or phone wallets etc to something that bypasses everything. In China AliPay has introduced facial recognition checkouts at the physical stores. You pay with your face using AI facial recognition camera tech together with a pin number. No need for a card or a smart phone or anything else. This even leap frogs Tencent’s Wechat pay which is the dominant cashless payment wallet system in China.

If this takes off worldwide unless Square in combination its cash app establishes the tech first could mean total disruption to everything from POS systems to Apple Wallet to Visa/MC/Amex to even traditional banking. Forget about the Fed in that case that is tech disruption that can happen very fast (it has only started to happened in China in the last year or so).

I did not want to continue the previous thread as parts of it wandered in the OT territory. However the bit related to square and fintech space I think are still very relevant to this board. I think I am not quite certain how facial recognition will make the entire payment industry obsolete and hence this post.

So I understand the power of facial recognition and I get it that it may even be more secure, but it will still be used to move money from a store of value (I am just using Card/Card company as store of value). So that will still have to be done by some third party. So all the credit checks and credit limits and whether you have the money that can be paid are still valid. And once the transaction is made the money goes to the seller and your account is debited by the equivalent amount. Whether one uses card or facial recognition, it does not change the facts how transaction will happen. So all the finance companies and their n/w is still in the play. Yes you do not need another dongle.

I would think companies like AMEX, VISA etc can license the facial recognition technology from a tech company or build their own and viola face can now be used as a card. So my guess would be that AMEX, VISA and MC are still going to be relevant.

The case for paypal may be a little different but I dont think facial recognition can make it obsolete either. Consider all the transactions happening online using a mobile device or computer. How many would like to turn on the video and move around so their picture fits in a 2 by 2 box or whatever size. I just don’t think thats very convenient. May be one day if it can be made completely seem less there may be a chance.

Now coming to square, all these small vendors that have these square devices will not have to have some sort of gopro camera device but ultimately that needs to be connected to the big card merchants ( visa etc.) So instead of a card reader device a camera + built in square app that has facial recognition tech built in can be used to make payments. They are not there but of course to stay relevant SQ will have to continue to innovate. If they dont, some other competitor existing or the new one can make them irrelevant. So I do not deny that there is risk but which business can expect to stand still these days.

In summary, I do not see how lot of these existing companies can become obsolete with introduction of facial recognition. Hopefully Ant or someone more knowledgeable than me can shed more light on this topic.