MOBILE PAYMENTS & WALLETS: THE WAR IS DECLARED
Mobile payments and wallets are expanding in every part of the world. The United States and China noticeably. This TRUSTECH conference exposes the situation in each country.
State of Mobile Payments in US
There’s a long history in the credit card industry in the US. But ironically, they have been slower than any other countries in the world in upgrading the payments infrastructures. When they started deploying mobile payment services in the US, there were very few places where it was possible to use it. Today, there’s a process in progress, but the timeline of deployment customer services and the timeline of merchant acceptance capability have been different.
In the US, there’s currently less than 1% of all transactions done with mobile payments. It’s growing, but the numbers are still very small. Users mobile payments in Europe are ahead of 35 million, whereas in the US they’re 26 million. Contactless cards will arrive in 2019, so they might push merchant acceptance.
Merchants must train their staff and change their equipment, so they have to be convinced that people are going to use them to make those investments. In the US market, Apple, Google and Samsung added more features to mobile payments to encourage it.
One hundred million contactless cards will be in circulation at the end of 2019, whereas there’s almost none today. But the question is: will the contactless card lead people to mobile payment? In other markets, consumers still use cards more than their phones even if they could use them. It’s going to be interesting to watch this evolution in the US.
Chinese Mobile Payment Revolution - From Success in China to Global Reach
Mobile payments are very popular in China, because 50% of transactions are made by mobile, and 75% of online purchases are paid by it. From the first cup of coffee of the morning to the last taxi of the day, every merchant expects you to pay with your phone. For example, to book a restaurant, you can do it by scanning a QR code. Mobile payments can be used everywhere, on a daily basis in China.
The card is an alternative payment method. When Chinese people go overseas, they prefer using cash because most of the shops don’t propose wallets or accept Chinese payment cards. That’s why 90% of overseas payments are cash for the Chinese. There’re a few reasons why they’re so linked to their wallet:
- Because they are used to using mobiles for everything in their lives. Alibaba is very efficient in educating the population to adopt this new lifestyle.
- Patriotism is a second reason, because Chinese people are really proud of mobile payments and consider it as their 5th greatest invention.
- Because of the better conversion rate.
- Chinese wallets apps really spend a lot of money end energy on the promotion aspects of the e-wallets.
- Merchants have the data about who has made the payments at their shops and know more easily their consumer profiles.
In China, Alipay account 50% of the total mobile payments. It belongs to the Alibaba groups, the number one ecommerce platform in the country. In terms of ecommerce, transaction volumes start to stabilize. In 2018, it has decreased by 1%, so it begins to saturate after years of rapid growth. The mobile payment market has also started to stabilize, and the competition is hard for the Chinese mobile companies and the Chinese wallets. That’s why their next step is to internationalize their services.
The first bank card in China was born in the eighties. The system of Chinese bank wasn’t interconnected. Merchants had several terminals and clients used to choose one related to each bank. It was a waste and a poor client service. In 2002, the government and the central bank of China decided to create a national infrastructure to improve the client service. Today, China is the first country in terms of transaction volume.
UnionPay allows payment, transfer, payment of the tax and the energy bills. The consumer also receives promotions from the merchants according to localization. It’s a unified application and the users can make everything with it. Before the buzz of this application, different Chinese banks launched their own app, the card holder needed to download each app, which was laborious and complex. Thanks to the initiative of the central bank, China now has this application.