QR-vs-NFC game en­livens mar­ket

China Daily (Hong Kong) - - BUSINESS - By MA SI masi@chi­nadaily.com.cn

The com­pe­ti­tion in China’s multi­bil­lion-dol­lar mo­bile pay­ment mar­ket has in­ten­si­fied with Ap­ple Inc step­ping up ef­forts to chal­lenge the dom­i­nance of Alibaba Group Hold­ing Ltd and Ten­cent Hold­ings Ltd.

The US tech gi­ant launched a large-scale pro­mo­tion cam­paign for its mo­bile pay­ment ser­vice Ap­ple Pay ear­lier this month, in the hope of lur­ing more tech­nol­ogy-re­spon­sive con­sumers away from Alibaba’s Ali­pay and Ten­cent’s WeChat Pay

Un­like the two Chi­nese home­grown ser­vices which can be in­stalled in all kinds of mo­bile de­vices, Ap­ple Pay is only avail­able for iPhone users. But Ap­ple Pay ap­pears to en­joy an ad­van­tage in its use of near field com­mu­ni­ca­tion or NFC tech­nol­ogy, which uses a chipset em­bed­ded in smart­phones.

NFC tech­nol­ogy al­lows con­tact­less data ex­change be­tween de­vices and pointof-sale or POS ter­mi­nals. The trans­ac­tion is com­pleted when users hold their phones near a POS por­tal. It is more con­ve­nient than Ali­pay and WeChat Pay, which are ini­ti­ated by scan­ning a quick re­sponse or QR code, mar­ket peo­ple said.

But the key ques­tion is whether such con­ve­nience is rec­og­nized by con­sumers.

As part of its broader push to win more first-time users for its pay­ment ser­vice, Ap­ple part­nered with both on­line and off­line re­tail­ers to launch the pro­mo­tion cam­paign.

From July 18 to 24, Ap­ple Pay users in China who went shop­ping at cer­tain re­tail­ers and su­per­mar­kets re­ceived ben­e­fits like huge dis­count of­fers and ad­di­tional re­ward points.

The pro­mo­tion in­volved 28 off­line re­tail stores, su­per­mar­kets and restau­rants such as Star­bucks and Costa Cof­fee, as well as 16 in­ter­net mer­chants, in­clud­ing bike-shar­ing app Mo­bike, on­line travel app Ctrip and e-com­merce site JD.

Jen­nifer Bai­ley, vice-pres­i­dent of Ap­ple Pay, told fi­nan­cial con­tent provider Caixin

Ap­ple needs to come up with more ser­vices to dif­fer­en­ti­ate it­self from its ri­vals.” Li Chao, an an­a­lyst at iRe­search Con­sult­ing Group

that the pro­mo­tion came as the pay­ment tool is ex­pand­ing its scale and part­ner­ship with lo­cal banks.

Ac­cord­ing to Bai­ley, 97 per­cent of the Ap­ple Pay users in China are very sat­is­fied with the ser­vice and the com­pany aims to en­cour­age every iPhone user to opt for Ap­ple Pay.

The pro­mo­tion evoked a mixed re­sponse in China. At a Bei­jing branch of Burger King, a US-based fast-food chain, when a poster ma­te­ri­al­ized an­nounc­ing that cus­tomers can re­ceive a 50-per­cent dis­count by us­ing Ap­ple Pay, only two of the 14 cus­tomers who paid bills in the next few min­utes availed of the of­fer. Eight of them used Ali­pay or Wechat Pay, three used bank cards and one paid by cash.

In the first quar­ter of 2017, China’s third-party mo­bile pay­ment mar­ket saw trans­ac­tions worth 18.8 tril­lion yuan ($2.78 tril­lion), up al­most 47 per­cent year-on-year, ac­cord­ing to Bei­jing-based re­search agency Analysys.

Ali­pay and WeChat Pay com­manded mar­ket shares of nearly 54 per­cent and 40 per­cent re­spec­tively.

Li Chao, an an­a­lyst at iRe­search Con­sult­ing Group, said NFC-based pay­ment ser­vices still have a very lim­ited pres­ence in China. Con­sumers have been long ac­cus­tomed to QR code-based pay­ments

Li said huge re­sources and big ef­forts will be re­quired to change con­sumer habits and pref­er­ences. “The (Ap­ple Pay) pro­mo­tion may be ef­fec­tive in the short term. But in the long term, Ap­ple needs to come up with more ser­vices to dif­fer­en­ti­ate it­self from its ri­vals.”

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