Alipay adds digital storage feature for identification documents

Alipay, the third party payments provider operated by Alibaba’s financial affiliate Ant Financial, has launched a new feature that allows users to store documents as the company looks towards helping its users further digitalise their lifestyle.

Alipay already allows its 450 million users to link their bank or credit cards to its app and make payments on Alibaba’s Taobao and Tmall, China’s largest e-commerce marketplaces. The app also lets users make payments to various merchants via QR codes in regions such as China, Southeast Asia and Europe. Alibaba is the owner of the South China Morning Post.

The new documents feature allows Chinese users to snap a picture of their identification card, driving license and even property deeds to store the relevant information within the app.

However, the digital identification documents stored in Alipay cannot replace physical documents currently required when a user opens a bank account in China. Alipay said the function is currently only for the user’s reference, since they may not always have their documents with them when they need to recall specific information. The feature is also available only to Chinese citizens.

But digital documents could potentially replace the need for physical identity cards or driving licenses in the future, according to Zhang Yi, the chief executive of Guangdong-based consultancy iiMedia Research.

Alipay expands its mobile app payment network in Europe to 2,000 points of sale

“Today photocopies of identification documents are still not accepted because there is no way of verifying them,” Zhang said.

“But if Alipay or a third-party service is able to independently verify the information in the Alipay app to verify that the documents are real and belong to the registered Alipay user, digital documents could possibly replace physical ones in the future.”

However, he added that one big obstacle for digital identification documents are the laws surrounding them.

“Technology today can definitely verify the authenticity of documents better than the naked eye,” he said. “But the law today still requires people to present their physical documents when opening a bank account or conducting similar transactions. If the law can be changed, digital identity documentation could be viable.”

Some analysts have also expressed concerns over the storage of such sensitive information, emphasising that Alipay would need to ensure that customers feel safe storing their identification documents with the company.

“The new feature concerns a lot of private information, Alipay will have to go a long way to educate users about information security,” said Neil Wang, Greater China president for research firm Frost & Sullivan.

“Over the past few years, Alipay has changed the payment behaviour of customers by launching the wallet feature. The newly launched documents feature could trigger another dramatic change and become rooted in many aspects of users’ lives, thus enhancing Alipay’s user stickiness,” he added.

However, Wang echoed Zhang’s sentiments that the potential usefulness of the documents feature is determined by how other stakeholders in the ecosystem, such as the authorities, can work together with Alipay to help authorise the use of digital identification documents.

“It would take some time for other stakeholders to join the game,” he said.

Currently, artificial intelligence (AI) technology is already able to verify the authenticity of documents such as passports. In Hong Kong, financial technology start-up Neat allows users to open a prepaid credit card account instantly by uploading a photograph of their passport details page and taking a selfie.

The passport page is scanned with AI technology to check for authenticity, and the picture in the passport is compared with the selfie to ensure that both belong to the same person.

“Several years ago, few believed that ride-sharing start-ups could compete with the taxi industry in China,” Zhang said. “Today ride-sharing companies can operate legally in the country. Digital identification documents are not authorised now, but perhaps with time this could change as well.”