08 Dec Alipay and Wechat Pay expand into the US and Europe
While payment by smartphone still leads a niche existence in this country and the market is fractured by many different providers, mobile payment has long since established itself in China. 14% of the Chinese population say they no longer have any cash with them, as all transactions can be paid for using Alipay or Wechat Pay. These two services share the Chinese market.
The numbers are overwhelming. In 2016, transactions worth a whopping 5.5 trillion US dollars were made in China. In comparison, only mobile transactions worth 112 billion US dollars were made in the USA – China has almost 50 times the volume of mobile payments. This illustrates the enormous potential of this payment method and shows that mobile payments are very likely to be the future of payment transactions.
Europe and the USA have also recognized the potential and are now gradually offering Alipay and Wechat. The goal is to enable the approximately 120 million annual Chinese tourists to easily pay abroad. Prominent chains that are now introducing these payment methods are, for example, Marriott and Uber, as well as Yelp, and Caesars in Las Vegas. The expansion is also being pushed ahead in Germany.
It remains to be seen whether the market for payment apps will consolidate in the foreseeable future. Since very large companies are still involved, this consolidation can still be a long time coming. However, the success in China makes it clear that mobile payment methods have the potential to replace cash. It remains exciting to see who can ultimately prevail with their solution. Of course, other factors also play an important role. Mobile payment can of course only be offered where the infrastructure allows it. Even if we certainly have enough smartphones in Germany, we can still use better network coverage for mobile internet so that this technology can also establish itself outside the metropolitan areas. The trust of consumers must certainly be won even more when it comes to doing banking with Smart Services or SaaS. At the moment it looks very much that this future market will be tapped by FinTechs before banks offer corresponding solutions.