Pay by selfie: Ant Financial buys EyeVerify to add eye print authentication to Alipay

Ant Financial Services, the Alibaba Group affiliate, has bought a US biometric security company, bringing it a step closer toward making advanced eye print authentication possible on its Alipay electronic payment system.

Ant Financial agreed to pay more than US$100 million for ownership of EyeVerify, according to a source with knowledge of the transaction.

The deal marks Ant Financial’s first investment in the US five months after it closed a record US$4.5 billion round of private equity financing, which is the single largest private placement by an internet company. Ant Financial is now valued at about US$60 billion.

“The acquisition of EyeVerify is a critical part of our effort to make bold, yet thoughtful moves to continually enhance user trust, safety, and experience,” Jason Lu, the vice-president of fraud risk management at Ant Financial, said on Tuesday in a statement that did not provide financial details.

EyeVerify will operate as a wholly owned subsidiary of Ant Financial and continue to be based in Kansas City, Missouri.

Earlier this year, Ant Financial and EyeVerify entered into a licensing agreement in which the US firm’s Eyeprint ID technology was integrated into Alipay for authenticating payments.

The Eyeprint ID software eliminates the need for traditional authentication methods, such as passwords, by transforming an ordinary self portrait, or selfie, into a “key” that protects consumers’ digital footprints, including their mobile transactions.

Alibaba executive chairman Jack Ma Yun showed off an early facial recognition tool during the 2015 CeBit technology exhibition in Hanover, Germany. At the show, Ma used it to buy a commemorative stamp from the 1948 Hanover trade fair via Alibaba’s e-commerce site.

New York-listed Alibaba owns the South China Morning Post.

Lu said Eyeprint ID represents “an important extension of our efforts to accelerate the global adoption of secure mobile payments and allows us to improve our overall risk management”.

According to Ant Financial, the proprietary technology is highly accurate, easy to use, and prevents spoof attacks. It can also recognise the difference between a real person and an image or video.

Eyeprint ID captures the visible veins and other unique micro features in and around the eye, and is highly complex and unique to every individual, Ant Financial said.

Those features can never be lost, stolen, or intercepted because the technology scrambles and encrypts the Eyeprint ID data locally – so it never leaves the mobile device of the user.

EyeVerify currently has 17 US patents issued and 15 more patents pending to continue to expand on the technology.

Toby Rush, the founder and chief executive of EyeVerify, said the company’s payment-grade biometric platform is “already trusted by over three dozen banks and technology leaders, and we look forward to helping even more people across the financial spectrum access digital services with security and convenience”.

“Ant Financial’s vision to turn trust into wealth for small and micro enterprises, as well as consumers worldwide, resonates deeply with our own core mission,” Rush said.

Established in October 2014, Hangzhou-based Ant Financial runs a range of businesses, including online bank MYBank, credit scoring service Sesame Credit, lending marketplace Zhao Cai Bao, mass-market investment vehicle Ant Fortune and Yu’e Bao, China’s largest money market fund.

Greg Kratofil Jnr, a technology and corporate finance expert at Kansas City law firm Polsinelli, helped broker the Ant Financial deal for EyeVerify, which has worked with Alipay for more than a year.

“Around April of this year, negotiations moved to an acquisition," Kratofil told the Post on Wednesday. “A number of companies were also interested in acquiring EyeVerify, or investing in the company.”

Kratofil predicted secure biometric identification will become standard for all financial applications within the next few years.

“It will not take long before [this technology] replaces passwords as the primary source of identification,” he said. “Biometric identification is currently dominated by fingerprint scanning, which has severe limitations.”

Ant Financial early last year teamed up with parent Alibaba to invest US$575 million in Paytm, India’s largest mobile payment services provider.

Paytm offers a wide range of value-added financial services including mobile top-up, utility bill payments, money transfer, movie ticketing and taxi-fare payments to its 122 million users in India as of January.

Total financial technology investments in the Asia-Pacific skyrocketed to a record US$9.62 billion in the January-to-July period on the back of Ant Financial’s oversized funding round in April, according to data from global consulting firm Accenture and venture capital database CB Insights.