China Daily (Canada) - - ANALYSIS -

off­line mer­chants in China al­low pay­ment by QR code

method will even­tu­ally come out on top is yet to be seen.

Ap­ple and Sam­sung’s ser­vices, both launched in China this year, are based on near-field com­mu­ni­ca­tion, tech­nol­ogy that en­ables two elec­tronic de­vices to “talk” by bring­ing them within a few cen­time­ters of each other. How­ever, which method will even­tu­ally come out on top is yet to be seen.

“The land­scape of pay­ment in­dus­try is chang­ing rapidly. Pay­ing by QR code is cer­tainly lead­ing the way in China right now, but one of the chal­lenges in fur­ther de­vel­op­ment this method come from con­vinc­ing more off­line mer­chants in China to up­date their cashier sys­tems to en­able QR code pay­ment,” she said.

An es­ti­mated 1 mil­lion off­line mer­chants in China al­low pay­ment by QR code. Mean­while, about 15 mil­lion cash ma­chines sup­port pay­ment by debit or credit card, and about 6 mil­lion sup­port pay­ment via nearfield com­mu­ni­ca­tion.

“The in­fra­struc­ture for near-field com­mu­ni­ca­tion pay­ment is good,” Fang said. “But as late movers, com­pa­nies that pro­vide NFC-en­abled pay­ment ser­vices re­ally need to step up their ef­forts to help users form the habit of us­ing such pay­ments.”

In ad­di­tion to in­ter­net com­pa­nies, banks and other com­pa­nies, such as real es­tate de­vel­oper Wanda Group, have made moves to ex­pand into the mo­bile pay­ment mar­ket.

Tang Kok San, coun­try man­ager for World­pay China, a pay­ment pro­cess­ing com­pany in Lon­don, said the bat­tle for supremacy in the pay­ment app mar­ket is just heat­ing up.

“Never be­fore has con­sumer choice been so broad,” he said. “There’s no doubt China’s mo­bile pay­ments space is get­ting big­ger and more com­pet­i­tive.”

The fierce com­pe­ti­tion, as well as the grow­ing num­ber of Chi­nese out­bound tourists and their ris­ing spend­ing power, has prompted Chi­nese com­pa­nies to look abroad for new growth mo­men­tum.

Eric Jing, pres­i­dent of Ant Fi­nan­cial, said the com­pany aims to have 2 bil­lion cus­tomers us­ing Ali­pay in the next decade, with about 60 per­cent from out­side China. How­ever, he con­ceded that de­vel­op­ing coun­tries that are rel­a­tively weak in finance in­fra­struc­ture of­fer more po­ten­tial than de­vel­oped re­gions.

Last year, Ant Fi­nan­cial in­vested in Paytm, one of In­dia’s largest dig­i­tal trans­ac­tion plat­forms, and since then the In­dian com­pany has seen its cus­tomer base grow by 22 mil­lion to more than 130 mil­lion users.

But Jing hasn’t given up on his dream of crack­ing the West. He is pin­ning his hopes on con­vinc­ing busi­nesses in de­vel­oped coun­tries to al­low Chi­nese trav­el­ers to se­lect Ali­pay as their first-choice pay­ment op­tion.

“By chang­ing the habits of West­ern busi­nesses, we hope we can one day change con­sumers’ habits, too,” he said.

To seize the op­por­tu­ni­ties brought by China’s Na­tional Day hol­i­day (Oct 1 to 7), one of the most pop­u­lar sea­sons for out­bound travel, Ant Fi­nan­cial reached a deal in Septem­ber with 10 over­seas air­ports, in­clud­ing Mu­nich, Sin­ga­pore Changi, Narita In­ter­na­tional (Tokyo), to en­sure Ali­pay is ac­cepted there.

WeChat, and Baidu Wal­let, which is run by search en­gine op­er­a­tor Baidu Inc, have also stepped up ef­forts to make sure Chi­nese tourists can use their apps in more shop­ping malls and air­ports over­seas.

Li Chao, an an­a­lyst for iRe­search Con­sult­ing Group, said the swelling num­ber of Chi­nese out­bound trav­el­ers and their spend­ing power are only part of the rea­son com­pa­nies are look­ing abroad.

“In­tense com­pe­ti­tion has dragged down prof­its for dig­i­tal pay­ment ser­vices in China,” he said. “Look­ing abroad is in line with their in­ter­na­tion­al­iza­tion strat­egy and the goal to be more prof­itable. The best way to start is with Chi­nese out­bound trav­el­ers.”

How­ever, Tang at World­pay China said the Euro­pean mar­ket is al­ready crowded and there is a sense of “app fa­tigue” set­ting in among con­sumers, so it may take a while for WeChat and Ali­pay to reach sim­i­lar heights in Europe and the United States.

“But th­ese busi­nesses can of­fer some­thing new and unique to the app frag­men­ta­tion that cur­rently dom­i­nates mo­bile use in the West,” he adds. “They have the po­ten­tial to dis­rupt the sta­tus quo and fun­da­men­tally change the way so­cial me­dia plat­forms are used by con­sumers in th­ese mar­kets.”

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