Cash - What’sthat?
Chinese financial technology companies hope to enable consumer payments without cash or credit worldwide
CHINA’S mobile payment providers are working to kickstart cashless societies around the world. Riding on the back of the growing numbers of Chinese tourists abroad, companies such as Ant Financial Services Group’s Alipay and Tencent’s Wechat Pay are developing new ways for consumers to spend their money while traveling without having to carry cash or credit.
In doing so, these enterprises seek to gain a foothold in countries that lack traditional credit card infrastructure, and grab hold of a nascent market that may fundamentally change how people interact with money.
In China, electronic wallets are ubiquitous, used for transactions both small and large. Last year, Chinese consumers made 35.3 trillion yuan ($5.2 trillion) worth of payments via mobile devices - around half the nation’s GDP, according to Internet consulting firm Analysys.
By linking their bank accounts to mobile payment platforms, users can use the e-wallet services on their smartphones to pay rent and utility bills, hail taxis, manage their finances and do more. Due to the increasing use of these platforms, the amount of mobile payments in China is now 50 times greater than that in the United States, which amounted to $112 billion in 2016, according to data from American market research company Forrester Research.
The services provided by these companies have spread to small merchants and individuals who might not need to use cash or credit cards at all due to the convenience and ease of mobile payment options and the limited number of point of sale terminals in stores.
In January, Ant Financial and U.S. money transfer company Moneygram announced a merger which would give the former access to 350,000 physical locations and 2.4 billion bank and mobile accounts under Moneygram.
Nonetheless, there are numerous obstacles in the way of mass adoption of mobile payment, including fragmented reception among merchants - in part due to the growing variety of options available to consumers. Beijing-based QF Pay seeks to provide a one-stop mobile payment solution to merchants that would enable them to accept payment from customers that use a variety of mobile wallets and payment methods.
Patrick Ngan, President and Co-founder of global mobile payment technology solutions provider QF Pay, told Chinafrica that Southeast Asian countries all want to attract Chinese money. “Merchants all want Chinese tourism money. Those big conglomerates, those big shopping malls, they all want to have a big sign saying ‘we welcome you’ in Chinese because they know [the tourists] spend big.”
Chinese mobile payment firms will also butt heads with conventional payment leaders such as Visa and Mastercard.
“If the sector doesn’t have competition, then you’d be worried. There is going to be consolidation along the way, but mobile payment is only scratching the surface at the moment.”