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Alibaba Group Holding Ltd (BABA) Prepares to Welcome Apple Inc. (AAPL)’s Apple Pay in China

While Apple Inc. (NASDAQ:AAPL) is still working on the details on launching Apple Pay in China, the Chinese e-commerce giant Alibaba Group Holding Ltd (NYSE:BABA) has geared up to launch its facial recognition technology for its mobile payments system – Alipay – which is already the largest online payment system in China’s trillion dollars’ worth of mobile payments market. Mark Spoonauer, the Editor in Chief of Tom’s Guide was on CNBC’s Tech Bet to express his views on the future of cashless payments worldwide after Alibaba Group Holding Ltd’s facial recognition technology.

Alibaba, is BABA a good stock to buy, Alipay, Apple Pay, Apple, is AAPL a good stock to buy, China

While Alibaba Group Holding Ltd (NYSE:BABA) is initially looking to launch its facial recognition technology in China – where almost 50% of all online transactions are done through Alipay – it has plans to launch it globally as we already see it seeking to sneak into mobile payment systems in India – another fastest growing economy in Asia. Facial recognition technologies are not considered secure and as Tom’s Guide’s Mark Spoonauer believe Alibaba Group Holding Ltd’s facial recognition payment system would be not be used widely due to security issues associated with it.

“At least, in China it has a shot – because of how huge Alibaba is. But, I have some questions about the security around this feature because it’s been fooled before. What’s interesting about this is that 90% percent of what makes faces different from one to the other – like the area you are talking about – is just 10% of the surface area. So, it’s pretty easy to fool especially for younger people,” Spoonauer said.

Whether or not Alibaba Group Holding Ltd’s new technology succeed globally, it sure can do so in China as it is already a well-established name in mobile payments there. According to an estimate Alibaba Group Holding Ltd’s Alipay service has more than 300 million users in China. Alibaba Group Holding Ltd is initially launching a beta version of this feature. Spoonauer suggests Alibaba should use this facial recognition technology as a part of a dual authentication process to make it less prone to theft and fraud.

“I think Apple has the most momentum right now because it’s inside phones – with the touch ID that they are using. And it’s moving to your wrist with Apple Pay. What makes that so easy is that you would be able to just tap to pay without having to whip at your phone. It’s that balance of security and ease to use that everyone is going after,” Spoonauer said.

Apple Inc. (NASDAQ:AAPL) has been working hard to enter China’s extremely large mobile payments market after the dream run of its iPhone 6 in China but Alibaba Group Holding Ltd’s advertising gimmick – as some may call it – might push Apple Inc. (NASDAQ:AAPL) to delay the launch of its Apple Pay in China.

Apple Inc. was eyeing to partnership with Alibaba Group Holding Ltd to launch its mobile payment system in China. While Apple Inc. would enter Chinese digital payments industry with an edge over Alibaba Group Holding Ltd (NYSE:BABA) due to its security it would not be an easy run for Apple if it decides to compete with Alibaba Group Holding Ltd on its home ground. Apple Inc. might wait and watch if Alibaba Group Holding Ltd’s facial recognition technology grows with consumers.

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