Vietnamese authorities have mandated the use of facial recognition technology for digital payments exceeding USD 390.
This new requirement applies to money transfers conducted through both banks and e-wallets, necessitating facial scans via smartphone banking applications.
The State Bank of Vietnam has stated that this measure is intended to enhance the security of online and card-based transactions. Despite this, the regulation has sparked privacy and security concerns among internet users, who worry about the extensive collection of biometric data and potential exposure to cyber threats. These concerns are underscored by Vietnam’s cybersecurity challenges; in 2023, Vietnam's web domain, .vn, ranked as the fifth most vulnerable globally to cyber-attacks and data theft, according to a report by cybersecurity firm Kaspersky.
Global trend towards biometrics
Vietnam's move towards facial recognition for digital payments is part of a global trend where countries are increasingly incorporating biometric technologies into financial systems. Similar measures have been adopted in countries like China and India, where biometric data is used for identity verification and to secure digital transactions. However, these initiatives often face criticism for potential privacy infringements and the risks associated with data breaches.
As Vietnam advances in its digital transformation journey, the balance between enhancing security and protecting individual privacy remains a key point of contention. Financial institutions are now tasked with adapting to the new regulations, which may involve significant technological upgrades and increased compliance costs.
The debate surrounding the necessity and implications of such security measures continues to evolve, with stakeholders closely watching the impact on both the financial sector and individual freedoms.
Technological evolution
Advances in technology are expected to significantly impact the efficacy and security of facial recognition systems. Emerging technologies such as AI and machine learning (ML) are poised to enhance the accuracy and speed of facial recognition systems, reducing errors and improving user experience. AI algorithms are becoming more sophisticated in distinguishing between real and fraudulent attempts to use facial recognition, thereby increasing the system's resilience against spoofing attacks.
However, as technology advances, so do the methods employed by cybercriminals to exploit vulnerabilities. The need for constant vigilance and adaptation of security measures remains critical. Governments and financial institutions must stay ahead of potential threats by continuously updating and improving their facial recognition systems to address new challenges.
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Bank Biometrics to Become Mandatory in Vietnam Starting July 1
The State Bank of Vietnam (SBV) has announced that biometric authentication will become mandatory for certain online transactions starting July 1, 2024.
The measure is part of an effort to bolster security amidst the increasing prevalence of cashless payments. Any single online transaction exceeding VND10 million (approximately USD $392.65) or daily transactions surpassing VND20 million will require biometric verification.
The Bank is pursuing authentication methods that are more secure than traditional password-based systems and one-time passwords (OTPs), which have been deemed vulnerable to cyberattacks. The biometric data will be matched with information stored in the national ID database, thereby enhancing the security of bank accounts and preventing financial fraud.
Pham Anh Tuan, Director General of the SBV’s Payment Department, highlighted the widespread use of personal payment accounts in Vietnam, noting that over 87 percent of adults own at least one account. The use of QR codes for payments has also surged recently.
Experts have pointed out that the new biometric requirements will aid in managing accounts and transactions more effectively, as well as in tracing and recovering money from cyber scams.
Vu Ngoc Son from the National Cybersecurity Association mentioned that biometric authentication could limit the use of virtual bank accounts and aid law enforcement in combating cybercrime. Domestic banks are already preparing for the new regulations by notifying and reminding customers to update their biometric registration.
In 2023, the total financial loss due to online scams in Vietnam was estimated to be around VND8-10 trillion, with 91 percent of these frauds linked to financial schemes. Major General Nguyen Van Giang, Deputy Director of the Department of Cyber Security and High-Tech Crime Prevention (A05) under the Ministry of Public Security, has urged the public to remain vigilant against scams and to utilize multi-factor authentication to safeguard their financial information.