The Future of Mobile Payment in the U.S. Is What’s Happening in China Today

As time pass by, many differences between the U.S. and China have narrowed down and sometimes even China is leading in some industries. In 2008, I was amazed by the convenience of credit cards in the U.S. because credit card hadn’t been used widely in China, especially when dealing with small merchants. Today, I find payment system in the U.S. is so hard to use compared with the excellent experience in China. However, “Rome wasn’t built in 3 days.”

QQ截图20170418154018.jpg

Source: Financial Times

Similar to eBay acquired Paypal for supporting its e-commerce business, the tech giant in China, Alibaba, introduced its Alipay in 2003 to solve the annoying transaction process between its independent merchants and customers. However, the reason why the process was annoying may surprise you.

First, not many people in China had credit cards or even cards at that time because most of the Chinese people were still using bankbook for their savings. Second, many rising millennials, who were also the main customers of Alibaba, were not able to apply for credit cards because of their age and income. Thirdly, using a card for online shopping could be a suffering process because of the strict protocols. Only typing the password for cards is the least thing you must do. It is a common fact that banks always require their customers use password cards for every transaction.

 

In the beginning of 2008, Alibaba introduced the mobile version of Alipay. Five years later, WeChat, a dominant mobile chatting app in China, also introduced its built-in payment system. After years of heavy promotion done by both Alipay and WeChat, not only these apps are commonly used in e-commerce but also in every offline retail transaction. The heavy promotions are important because the strong incentives made customers force offline retailers to upgrade their payment system for accepting Alipay and WeChat.

In Hangzhou, people can literally get rid of their wallet because everything can be paid by phone. These features may include but not limited to transportation, rent, utilities, vending machines, flight tickets, fund, insurances, loans, fines, red pockets, and even money to beggars. If you are still looking for changes, why not just scan the QR codes and get them instantly paid?

After I enjoyed the omni-service provided by Alipay and WeChat in China, typing long card info online is really a suffering thing to do for me in the U.S. I’ve lost my credit card once, and then I had to change all my payment info on Amazon, Verizon, apartment website, etc. In China, the paying process is only 2 steps, scan the QR code, type the password or use scan your fingerprint, done. If there’s any suspicious transaction happens, it is always 24/7 customer service in the app and 100% guaranteed refunds.

Alipay and WeChat are fancy not just because they are simple mobile payment apps but also for their integration of all the services that involve money. Alipay and WeChat have as many functions as a combination of credit cards, debit cards, metro cards, investment accounts, lottery tickets, hospital front desks…

Based on the success of Alipay and WeChat, I highly recommend Amazon to forget about their card program and start their own omnichannel financial services on mobile. They have already got a huge customer base and they can get “low-cost loans” from financial services sector because the huge cash flow created by their customers.

There may have concerns about that their lives are totally exposed to the government, but to most of the people in China, they value convenience over privacy. However, a lot of things cannot be done in the U.S. as easily as in China. Laws, regulations, hearings, human right groups, resistance from huge banks will slow the pace of chasing. For China, since mobile payment is unleashing the purchasing power of Chinese people, it will be part of people life until more advanced technology take its place. For the U.S., it is hard to make predictions since people are still being indulged in the convenience of credit cards.

 

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