Fintech: Where the Chinese go, Alipay and WeChat Pay go. “Mobile Payment Path” or Digital Silk Road?

16/07/2019

From Tokyo to Mexico City, “Alipay and WeChat Pay Accepted Here”  plates are everywhere. China is building a “mobile payment path” let countries boosting their own fintech  sector

 

 

More people pay with their phones in China than the entire population of the US. Today, PRC has emerged on the world stage with a host of global tech companies that are innovative and competitive. And their successes are being studied and replicated in other markets. As stated by SCMP,  from social-ecommerce to short video, global technology companies are now replicating successful concepts from their Chinese counterparts.

 

China has pioneered the so called “super app”, a one-stop shop for services from shopping to ride hailing to money transfers to flight bookings.

 

Chinese tourists are exporting new Made in China trends. They already settled down a “mobile payment path”, the footpath of Chinese Digital Silk Road.  Today there are over 2 billion people with phones but no bank accounts. This is a chance for financial inclusion for everyone. 

 

©Cifnews雨果网, Bic Camera mall a Tokyo, Shinjuku, the first mall in Japan that allowed Alipay and WeChat payment

 

Where people go, they need to buy goods; and where the Chinese go, they prefer to buy using Alipay or WeChat Pay.  So, while the Digital Silk Road is being promoted by the Chinese government and to some extent by more than 40 countries along the way, the mobile payments path has been under construction by traveling individuals and the businesses who serve them for some years now.  This “mobile payments path” is real and and dynamic.  People are driving it, not government policy. Chinese travelers and tourists have been building it with each step they take and each mobile payment they make and let possible to SEA fintech sector – for example – arise.

 

fintech in china - shenzhen - cifnews

©Unsplash. Ke Yuan Nan Lu, Shenzhen. Beijing, Shanghai, Shenzhen and Hangzhou have emerged as China’s leading hubs for the fintech sector.

 

According to statistics, last year there were more than 160 million outbound Chinese travelers. If those travelers all landed in the same place and formed a country, it would be the 9th most populous country in the world! Moreover, the Chinese consumer is becoming wealthier.  All this purchasing power and the sheer number of travelers means that no country can afford to disregard the opportunity. China already surpassed the US in total e-commerce sales volume a few years ago,  while all predictions show the size of China’s economy passing the US’s in the next 5-10 years. 

 

And the Chinese consumer is becoming wealthier.  All this purchasing power and the sheer number of travelers means that no country can afford to disregard the opportunity.

 

Hardly anyone even noticed.  Today Chinese don’t use credit cards, a login for each site, forgettable passwords or any of that mess that the Western e-commerce shopper has to deal with, they find what they want on their phone, to scan a QR code to log in, press a button to pay. Currently, 96% of all e-commerce in China is transacted via Alipay or WeChat Pay.  Again, this all changed very quickly with new e-commerce players online and new payment technologies. The next step is pay through facial recognition.

By the way, this “mobile payments path” is already built and becoming more and more like a superhighway every day.  From North America to Europe, vendors wherever the Chinese go are accepting Alipay and WeChat Pay, for the simple reason that it makes good business sense.

 

©Cifnews雨果网. Zhongshan,China. Consumer doing payment at a restaurant via mobile. Wechat or Alipay for payment and money transfering via mobile becomes very common and popular in China,fast and safe.

 

In fact, in China, Alipay and WeChat pay are so dominant that even the Central Bank had to sneak in via the back door under the guise of “protecting the consumer.”  At current course and speed, the banking system would have been rendered pretty much irrelevant to the average consumer. That has all been “fixed” as of this week as the Chinese Central Bank takes its third and most comprehensive step towards regulating the payments industry.

According to Matthew Brennan, Managing Director of China Channel, the switch has just been flipped, and payments in RMB must now run through a central clearinghouse system, a brand new one for mobile payments called NetUnion (Wanglian 网联). But this is regulation due to encourage the big players to self-regulate and play well together in the same sandbox. Ultimately, this is government regulation in the true Chinese sense: as long as the players behave and cooperate, the state will not intervene, or not intervene too much. 

 

Chinese Central bank clever approach to putting this regulatory infrastructure in without disrupting the system it has been an excellent example of industry and the regulatory authorities working closely together to ensure a stable system. 

 

Competition between the players remains, but the playing field has been kept level for all participants. And the question is when will the “mobile payment path” be built in the BRI countries? The answer is that is it already has begun and the next target is Africa. Chinese tech giants investments let SEA fintech sector to be real. Now, they’re looking for Africa.

As with the first example of the dramatic increase in outbound travelers, the infrastructure projects that are ongoing all over the ancient silk road and maritime trade routes from China westward are creating a dramatic expansion in Chinese expatriates.  According to statistics, today in Kenya, there are quite a large number of Chinese expatriates.

 

China investment in Africa - globe - cifnews

© Unsplash. China is exporting e-commerce culture to Africa and African e-commerce market is booming.

 

From 7,000 in 2013 to over 21,000 today. While Alipay and WeChat Pay has not caught on amongst the general population, the stores the Chinese expatriates frequent do accept Alipay and WeChat Pay.  Jack Ma and Alibaba executives have been regular visitors to Africa as of late, and South Africa has long been a WeChat stronghold, due in part that a large early investor of WeChat’s parent company Tencent is located in South AfricaWe already proved and analyzed this mobile phone payment platform explode in China. Thus, what’s the final theory? Where the Chinese go, Alipay and WeChat go. Africa, Eastern Europe, and Central Asia are next. 

 

 

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