![]() Digital payment has reached the senior generation and foreign visitors. In China, the adoption rate of digital payment is high across all age groups.Future payment types create new opportunities for banks to build their competitive advantage in the new era. Alipay, WeChat Pay and UnionPay have commercialized facial recognition payments to tens of thousands of stores by providing the tiny and cheap facial recognition POS terminals and rewarding early adopted merchants. ![]() Biometric-based and invisible future payment types are gaining ground. China is further initiating more advanced payment methods such as facial recognition payment.A standalone payment company without an ecosystem won’t survive and thrive in China. WeChat Pay is backed by social media, gaming and technology ecosystems from Tencent. The most successful banking payment app from China Merchants Bank also owns a large banking centered ecosystem that binds with many adjacent industry partners. The most successful payment companies in China are all backed by ecosystems. Alipay is backed by Alibaba’s giant ecosystems across eCommerce, retail and technologies.Also, their main profit source is not transaction fees but monetizing customer traffic and data insights, as well as developing more high-margin products such as lending products. The mobile payment market in China has scale but profit margin is extremely thin. In the early age of Alipay and WeChat Pay, payment companies lose money when providing a better payment experience.In terms of China’s retail payment market, there are some significant differences. But because the base number is low, the scale of mobile payment is still limited in the short-term. Forrester predicts the CAGR of mobile payments in the US from 2018 to 2023 is 16.8%. These underserviced customers create opportunities for mobile payments. According to data from the US Federal Deposit Insurance Corporation, an estimated 6.5% of households – about 8.4 million – were unbanked in the US in 2017. Even in the US, there is still some unbanked and underbanked populations lacking access to credit cards. ![]() ![]()
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