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  • Thierry Spanjaard

Are Alipay and China UnionPay the future of European payments?

In the payment field as in many others Europe has been rich with past initiatives to establish a Europe-based payment system for years but has met little success. Now, Europe has been sidelined to an observer position in the fight between world superpowers for payment supremacy.

While current leading payment schemes, Visa, MasterCard, American Express, … focused on credit and debit cards, they are not the leaders in mobile wallets: key players in the NFC-based mobile wallets are Apple, Samsung and Google, while WeChat and Alipay have reached a pole position when it comes to QRcode based systems.

A set of European mobile wallet operators Bluecode, ePassi, Momo Pocket, Pagaqui, Pivo and Vipps, who claim to have 5 million users in 10 European countries, from Finland to Portugal, have just announced they are making their technologies interoperable. The path to interoperability has been made easy as they are all already working with Chinese giant Alipay and are using a unified QRcode technology. These six mobile wallet operators claim that around 190,000 merchants in Europe accept payments from their systems and directly from Alipay for Chinese visitors.

In terms of transaction volume, the battle for mobile payments is already over: mobile payments in the US accounted for US$ 161 billion (EUR 142 billion) in 2018 while they were 250 times more important in China with US$ 40 trillion (EUR 35 trillion) payment volume at the same time, according to Medici.

The technology shift between traditional payments and mobile payments might be on its way: Juniper Research anticipates that the number of people using digital wallets will increase from 2.3 billion this year to nearly 4 billion, or 50% of the world’s population, by 2024.

Chinese players have been trying to set foot in Europe already for some time. One may remember that Chinese leading players have taken many initiatives in Europe. Alipay has been granted an electronic money license in Luxembourg, after having signed an agreement with Barclaycard to expand its acceptance network in the UK. Alipay is said to have tripled its number of merchants in Europe to “tens of thousands” in 2018.

WeChat Pay has identified Europe as a key growth market, with a first focus on making shopping easier for Chinese tourists in Europe.

China UnionPay is not left behind: in the first half of 2019, UnionPay set up an alliance with Worldline expanding its acceptance network to an additional 46,000 merchant locations across Europe and has signed an agreement with UK FinTech Tribe Payments to allow European financial institutions to issue UnionPay branded credit and debit cards. More globally, UnionPay has entered a partnership with ACI Worldwide with the goal of “promoting QR code payments” without giving further details. UnionPay’s global network has extended to 174 countries and regions. Furthermore, this covers 52 million merchants and over 2.6 million ATMs worldwide.

When Europeans will pay with Alipay, communicate with Huawei and travel on Comac C919, we will start to wonder why we have not been able to develop European-rooted world-level players.

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