Monday, 11 April 2016

China Leads the Way in Mobile Payments

Scan the QR code, input your password and presto! You've paid the bill
China is way ahead of Hong Kong when it comes to paying without having to take out your wallet.

And I'm not talking about using the Octopus card either.

CNN's Will Ripley demonstrated this by going to a small stall that sells jianbing -- a giant thin omelet filled with various ingredients and then folded up to eat like a sandwich -- and paid for it by scanning the QR code with his smartphone on the shop door.

This payment system can be extended to large stores, taxis, and even utility bills.

To put this into context, almost 10 years ago when I was in Beijing, I had to walk over to the management office and buy electricity and gas before using it. I would know if I ran out if my air conditioner suddenly didn't work or didn't have hot water in the shower.

And paying rent? I had to physically take out cash from my bank account from where I did banking and then bring it to my landlord's institution and deposit the large wad of cash into his account.

CNN's Will Ripley with Gu Yu of Mileslife
These days people can pay their bills and even their rent with a click of a button on WeChat or Alipay their smartphones.

Gu Yu is the co-founder of a new payment app called Mileslife where users can share a taxi and split the bill at the end.

He explains that because China's credit card system is not lucrative, the Chinese have skipped credit cards and moved onto mobile payments.

The benefits are obvious -- no need to carry cash around, particularly in China where the biggest denomination is 100 yuan, electronic receipts and easily keeping tabs on spending.

So why doesn't Hong Kong move into this direction? When the Octopus card came out in 1997, it seemed so revolutionary at the time, being able to use it for all forms of public transport and buy items with it and pay for parking.

But is that all Hong Kong can do when it comes to electronic payments?

Is the Octopus card the best that Hong Kong can do?
As Alipay is run by Alibaba and WeChat by Tencent, the banks here would obviously want a piece of the action, which is probably why the city doesn't have this service now. And besides people obsessed with collecting air miles/points/cash rebates on their credit cards may find it hard to switch...

But aren't mobile payments the future? Or are we waiting for the rest of the world to get on the band wagon before we do?

Interesting that in terms of mobile payments, China is the leader with estimated retail sales on smartphones rose to 85 percent to around US$334 billion in 2015, according to research firm eMarketer. That makes the Chinese market more than four times the size of the United States'.

Mind boggling.

1 comment:

  1. I agree China might be the leader in terms of mobile payments and apps. However, I have extremely serious doubts about the mobile payments in China.

    - how secure is it? Given the joke in Alibaba, Tencent and Sina's browser products, I would isolate the rest of my financal life away from any chinese mobile payments. This applies to the app and the backend itself.

    - lack of privacy: Given Alipay and WeChat is based in China, my movements are tracked by the government. Given recent cross border activities by the gov't, why should I let them know where I am?

    - of course the chinese market is more than 4 times the size of the US, China has at least 4.3 times the population of the US.