Monday, January 15, 2018

China Is Ahead Of The U.S. In Mobile Payments

I use a book in my class called The Economics of Macro Issues by Roger LeRoy Miller & Daniel K. Benjamin. One of the chapters is called "Revolutionizing the Way We Pay." It includes discussions of things like paying for goods with your phone, etc. So this article is related to that.

See The Cashless Society Has Arrived— Only It’s in China:Mobile payments surge to $9 trillion a year, changing how people shop, borrow—even panhandle by Alyssa Abkowitz of The WSJ. Excerpts:
"Though the U.S. saw $112 billion of mobile payments in 2016, by a Forrester Research estimate, such payments in China totaled $9 trillion"

"For Alibaba and Tencent, the payoff isn’t just the transaction fees they make from merchants, typically 0.6%. It’s also the consumer data collected"

"The payments haven’t been required to go through the central bank’s clearing system"

"Consumers also are being offered more pitches for loans, investments and other financial products via smartphone. Short-term consumer credit in China soared 160% in the first eight months of 2017"

"Chinese . . . spent about 66 trillion yuan (nearly $10 trillion[in cash]) that way in 2016, down about 10% in two years, according to a central-bank payments report."

"Alibaba, which hosts online shopping bazaars where merchants sell goods to consumers. More than a dozen years ago, Alibaba, taking a page from the U.S. company now called PayPal Holdings Inc., started a system called Alipay as an escrow service."

"passed PayPal as the largest mobile-payment platform in 2013."

"People link their bank accounts to the app, then can pay for things either by scanning a merchant’s QR code or having the merchant scan theirs. People also can transfer money by tapping on an icon in WeChat or Alipay."

"the government made it tough for Visa Inc. and Mastercard Inc. to set up shop.

The rise of tech companies as financial powers has dealt a blow to traditional banks. China’s state-owned banks lost nearly $23 billion in fees in 2015 they might have collected from card fees"

"Visa and Mastercard both have mobile apps that allow users to pay via near-field communication and are incorporating biometrics into their offerings. They also work with Apple Pay and Samsung Pay."

"Smartphones are vastly more common than Palm Pilots ever were, yet Apple Inc. has struggled to get consumers to use its Apple Pay service, now accepted at more than 50% of all U.S. retail locations.

Just 19% of iPhone users have tried Apple Pay at least once"

"In Scandinavia, Nordic and Dutch banks have cut total branch levels by about 50% from peak levels, and Sweden hasn’t had checks since the late 1980s, according to Citi Research, part of Citigroup Inc."

"WeChat Pay and Alipay are gaining attention in U.S. tourist centers after striking deals with hotels and resorts. A group of Chinese tourists recently dined at the Bacchanal Buffet at Caesars Palace in Las Vegas, where the menu includes T-bone Australian lamb, chilled crab legs and handmade dim sum. They settled their bill with a smartphone."

"Tencent and Alibaba say they have no plans to push their payment platforms to U.S. consumers. Many Americans don’t see the need for mobile payments, since their plastic cards and cash are welcomed and some merchants still accept checks.

“Any new way of paying has to prove itself to be incrementally better than any other options you have,” said James Wester of research firm IDC Financial Insights. In the U.S., “plastic is convenient, widely accepted and understood by the customer.”"

2 comments:

Autumn Cote said...

Would it be OK if I cross-posted this article to Writer Beat? There is no fee; I’m simply trying to add more content diversity for our community and I liked what you wrote. I’ll be sure to give you complete credit as the author. If "OK" please let me know via email, which can be found in my Google profile.

Cyril Morong said...

Yes, that is okay