It’s not going too far to say that, today, mobile payments using smartphone applications have leapfrogged debit and credit cards in China, signposting the way forward for the rest of the world. In 2015, Chinese users transacted $1 trillion through mobile payments using QR codes. In 2017 it was $15.5 trillion. In 2020 it is forecast that Chinese consumers will transact $45 through mobile payments, by which time the country will be pretty much cashless. China may be censoring Internet and be the source of dubious sales practices, but one thing it cannot be denied: it is at the top of mobile payments. If you ask a Chinese or a foreigner that has been there long enough about their favourite technologies, the common answer will be, without hesitation – Alipay. As you’ve probably figured out from the name, this is Alibaba’s mobile payment service, the Chinese equivalent of Amazon, which is the preferred destination for buying … well, practically everything.
For anyone who has tried the technology at least a couple of times, Alipay is the preferred choice. Everywhere you look, there are signs helpfully reminding that Alipay payments are accepted. What makes the system so popular is that it is not just about buying appliances. Although that is done with a phone, it is not limited to consumer electronics at all; you may use it to pay for goods and services of any nature. It is just that Alipay has become a perfectly normal and accepted way of making payments in China, and in a very short time at that.
Cash? What’s that?
Let’s take, for example, a lunch at a place – when the waiter brings you the bill, you get nothing more than a bit of paper with a QR code on it. You simply start the mobile application Alipay, scan the code and in a second the bill is closed and it’s time for the last sip of coffee.
QR codes are just one of the many ways in which residents pay for purchases and services. Through Alipay you can transfer money to a friend, pay for utilities, buy air and train tickets, and call the Chinese equivalent of Uber called Didi. If you are unhappy with a purchase and return it, it’s Alipay again you will get your money back through. The system is widespread, easy and secure, and many stores even give small discounts if you pay that way.
No matter how popular Alipay is, it is not the only such solution. The well-known social application WeChat also has its own insight into the idea of mobile payments. It can also be used to transfer money and even pay small bonuses to employees. A new practice among the big technology companies is to use WeChat to conduct a kind of lottery between staff – everyone gets some amount that ranges from $ 5 to $ 1,500. The money is immediately transferred to the relevant WeChat account.
Delivery here and now
Mobile payments go hand in hand with mobile food deliveries and the performance here is so high that it is simply putting Amazon’s notorious day-to-day delivery option to shame. In China you can order and pay over the phone for the delivery of virtually everything – even a glass of freshly squeezed juice. It is even more interesting that in many places no delivery is paid and no tip is given. Instead, there is a minimum for an order that is 30 yuan or about 4 dollars. The juice in question costs about 15 or 20 yuan and you get it directly right to the door. A couple of such services are struggling for the attention and money of consumers and the competition is really tough. Sherpa’s, for example, is very popular among foreigners in China. Are You Hungry Yet? and Baidu, which is the Chinese equivalent of Google, offer instant deliveries and non-cash and cardless payments. You can also track in real time the location of the motor cycle your order is travelling with. If you buy some electronics before 11 am, you will receive it the same day. Some deliveries take virtually 8-10 minutes.
Another approach is to gather users in group shopping. Customers share their shopping with friends on social networks and get discounts in return. For companies, this is a way to integrate additional large groups of people that they do not reach directly. Data from all mobile transactions goes to targeted ads based on user profiles, including their gender, location, marketing habits, and other factors.
Thus, while private initiatives such as Alipay and WeChat are at the forefront of China’s mobile revolution, India’s government launched earlier this year a new payment method using QR codes, in its bid to promote digital economy in the country.
The QR code as a national policy
After various payment methods like UPI and BHIM App for smartphones, national authorities have now launched Bharat QR code. Bharat QR, the latest initiative to boost digital transactions, will make use of QR codes system for payments across merchant outlets. The solution comes as a first of its kind throughout the globe. As of today, QR code system is the easiest method of payment for users in world’s second most populous country. However, different merchant outlets across the country use different QR codes. Bharat QR aims to standardise the payment method everywhere. For this purpose, payment companies such as MasterCard, American Express, National Payment Corporation of India (NPCI) and Visa cooperate to promote wider uptake of the Bharat QR payment method.
The prevailing method of payment now necessitates a consumer to swipe a debit or credit card and enter its PIN code to authenticate the payment. However, after the introduction of Bharat QR code, people can simply open their banking app or BHIM app, scan the merchant’s QR code, enter the payable amount and enter the four-digit code to authenticate the transaction. The amount will be directly transferred to the merchant’s bank account once the transaction is complete. In short, Bharat QR codes will provide customers with an easy scan and pay option, whatever their card type. Both the merchant and the customer will receive instant notification after the payment is successful. The method will eliminate the need of POS machines on a merchant outlet.
Bharat QR code will certainly remove a lot of traditional discrepancies in using digital money for the citizens. Firstly, the individual payment portals like India’s Paytm, Freecharge and MobiKwik required money to be transferred into their wallets first and then be used for further payments. Also, to make payments through these portals, both parties involved in the transaction must be using the same payment service to make it possible. From the merchant’s perspective, these apps charge a transactional fee from them. Also, there is a limit to the amount of payment that can be put in these portals.
Bharat QR code will eliminate all such roadblocks as it is directly linked to the bank. The payments will go straight to the merchant’s bank account through IMPS. Also, there is no limit to the amount of money the merchant can put in the bank. Hence digital payments will be made much easier for both parties after this financial reform. In case a user loses their smartphone, all they need to do is call their respective bank and inform them of the mishap; payments will be blocked and there is no risk.
The smartphone: tourist’s best friend
Other countries of the world also turn to mobile payments as part of everyday life. Mastercard, Visa and UnionPay International have introduced a standardized QR code platform for payments in Thailand that will let consumers make a transaction with their mobile device at any supporting location. The service has been designed to support the Bank of Thailand’s cashless agenda which aims to drive innovation, interoperability and security in payments across the country. Standardised QR Code is intended to be implemented by banks and merchants across Thailand by the end of the third quarter of 2017 and will be globally interoperable, meaning that consumers will be able to make payments using the same QR code at all places where the standards have been adopted.
One of the first to embrace the idea of a new type of payment were the drivers of the popular Tuk Tuk urban vehicles, operating as a sort of taxi service, especially for the numerous tourists. The introduction of QR codes solves the problem of taking small-value banknotes out of circulation because the fees for the Tuk Tuk transport are quite low. Moreover, the transaction saves tourists a currency exchange fee as they directly pay with their phone, using this QR code.
Having changed the way we shop, mobile technologies are on the verge of provoking another revolution – this time in the way we shop and pay. China is at the epicentre of this perfect storm, combining the convenience of the smartphone with the security of the traditional payment. Local giant Tencent says over 600 million users use mobile payment services that include WeChat Pay. Reuters estimates that $556 billion in transactions have been made with the app in 2016. Alipay, which operates similarly to WeChat Pay, has around 270 Alipay monthly active users, with about 175 million transactions each day. By comparison, Apple Pay has only 127 million users worldwide, although it is installed on virtually every iPhone. So maybe it will not be long before China, the first country to introduce paper money, will become the first to withdraw cash out of circulation.
