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The payment industry covers quite well the market of consumer to merchant payments. Standards are established, and leading players are known and identified. Once this is done, players attempt to extend to other market segments. Peer to peer is an obvious choice, and payments to charities and informal businesses is another one.
Last week, a partnership between iZettle and the City of London lead them to announce that some street performers in London were now able to accept payments by contactless cards.
However, even if such an announcement makes the news in the UK, the invisible revolution is coming from China!
The model set up by Chinese major payment operators WeChat Pay (by Tencent) and AliPay (by Alibaba) is totally different. In their operation mode, the payer just needs to scan a QRcode that identifies the payee with his/her smartphone app, choose the amount, and the payment is completed right away. This operation mode allows to pay merchants that have a permanent display of their QRcode identifier as well as individuals who use their own app on their smartphone to display their QRcode.
This system is so popular and so simple to use that WeChat Pay and AliPay are used extensively for any kind of payment. Already, all merchants are equipped with cardboard or plastic displays showing their QRcodes for WeChat Pay and AliPay.
Now, panhandlers or street artists also display QRcodes in order to get money from their fans. This not only solves the issue for the audience to have to fumble for coins or banknotes but also increases the amount they collect as the attendees are no longer limited by the cash in their pocket.
According to research by Penguin Intelligence, WeChat passed the 900 million monthly active users early 2017, and payments over CNY 500 (EUR 67) account for more than 60% of the transactions. According to this research, 92% of people in China’s biggest cities use apps like WeChat or AliPay as their primary payment method. Cash comes in second place (39%), while debit and credit cards are third. AliPay accounts for 500 million monthly active users.
WeChat and AliPay combined represent a total amount of US$ 16 trillion (EUR 13.8 trillion) in yearly transaction value, making China the undisputed leader in mobile payment adoption. The rest of the world keeps on preferring other technologies, but data demonstrates they lag behind: the US market accounts for US$ 112 billion (EUR 86.5 billion) in transaction value in 2016, according to Forrester Research, an equivalent to less than 1% of the Chinese mobile payment market.