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How does Fintech shape the functioning of SMEs' risk managements? The case of face-scan payment

Author

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  • Ding, Jingxuan
  • Luo, Jingwen
  • Xu, Xian

Abstract

We investigate the defensive behavior of SMEs in response to Fintech through the lens of biometric authentication payment systems (e.g., facial recognition), which involves potential data breaches for consumer privacy and thereby the requirement for managing the associated cyber risks. Exploiting high-frequency city-level insurance purchase data from a nationwide digital platform, and the staggered adoption of face-scan payment initiated by three internet giants (Alibaba, Tencent and UnionPay) in China, we find a substantial increase in SME insurance demand after the advent of face-scan payment. This fear for face-scan payment is enhanced by public attention to AI face-swap, which can replace the face of one person with another in photos or videos, yet mitigated by a greater familiarity of fingerprint payment, another biometric payment method which has been adopted prior to face-scan payment. Our paper indicates that technological uncertainty may play a crucial role in firms managing the novel risks related to Fintech.

Suggested Citation

  • Ding, Jingxuan & Luo, Jingwen & Xu, Xian, 2025. "How does Fintech shape the functioning of SMEs' risk managements? The case of face-scan payment," International Review of Financial Analysis, Elsevier, vol. 97(C).
    • Handle: RePEc:eee:finana:v:97:y:2025:i:c:s1057521924007154
    DOI: 10.1016/j.irfa.2024.103783
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    Keywords

    Fintech; Face-scan payment; Insurance; SME;
    All these keywords.

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • G40 - Financial Economics - - Behavioral Finance - - - General

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