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The Competitive Pattern of Mobile Payment in China

Hands of Person shopping in Internet making instant Mobile Telephone Payment Transaction

In the NPC and CPPCC of 2016, Li Keqiang, the premier of State Council mentioned about the Internet finance for two times in the government report. It is reported in the “important work part of 2016” that accelerate the reform and the improvement of the modern financial supervision system, enhance the efficiency of financial services real economy and realize the whole coverage of financial risks supervision. Standardize the development of the Internet finance, greatly develop inclusive finance and green finance. Strengthen whole-caliber macro-prudential external debt management, tighten system cage and reorganize and regularize financial order. Further clarify the principle of guarantee and mortgage exist at the same time, select the superior and eliminate the inferior and strictly control risks”. We can see that Chinese government adopts the attitude to encourage the development of the increasingly vigorous Internet finance industry within a controllable range. While as a core of  How to allocate mobile payment market, the huge cake in the future becomes one of most attractive topics in the near future.

In 2015, China’s third party mobile payment market scale had already reached 16.3626 trillion yuan and the scale of mobile payment had exceeded the PC terminal payment for the first time. Recently, there are three strong powers in the mobile payment market of China, which respectively come from Alipay under the flagship of Alibaba, Tenpay under the flagship of Tencent and CUP (China Union Pay).

From the performance in whole 2015, Alipay ranked first by occupying 72.9% of the mobile payment market across the country. As the major driving force of Ant Financial, Alipay is the major pivot of Alibaba Group in the Internet finance line. By the end of March, 2016, the real-name users of Alipay had already exceeded 450 million and cooperated with more than 200 financial institutions to provide payment services to ten thousands of small and micro commercial tenants. As is said “account is the world”, Alipay is recently the major channel to lead the users of Ant Financial. In another word, Alipay’s predominance in China’s mobile payment market is determined by Alibaba Group’s whole power and the pre-layout in the Internet economy line. As early as 2014, Alipay had already transcended PayPal and become the largest Internet payment agency. By now, Alipay is not only predominant in China’s mobile payment market, even many Asian countries including South Korea even European and American countries are constantly accepting the entrance of Alipay.

Tenpay of Tencent gained the second place of China’s mobile payment market in 2015 with the market occupancy of 17.4%, Tenpay and Alipay occupy almost ninety percent of the market share of China’s third party mobile payment. With the huge pressure of Alipay, the Tenpay’s achievement should also tribute to Tencent’s user group and user adhesiveness that have been accumulated for many years. The use of QQ and WeChat makes Tenpay spread in time at the arrival of the mobile Internet times and share the market.

Mobile payment flat illustration concept. Transaction accepted

Although Alipay and Tenpay almost occupy all the mobile payment market in China with the strengths of the Groups back them, CUP still doesn’t give up the competition for a piece of cake. Since Apple mobiles land China with Apple pay, the existing mobile payment market pattern in China may be impacted within a short period to a certain degree. On February 18, 2016, Apple Pay officially landed China’s mainland market, while one day earlier, many Chinese Banks had already issued the messages to support Apple Pay including Guangdong Development Bank, China Construction Bank and Bank of China. The Apple Pay’s entrance is really powerful and Apple has already carried out cooperations with more than 20 banks in China by joining hands with CUP. According to the prediction with the circle, since Apple Pay enters China, its primary potential clients of NFC payment will cover ten millions of users. On commercial tenants, recently, numerous offline commercial tenants and e-commerce platforms and apps have already announced to cooperate with Apple. Recently, many platforms like Xinmeida, Ctrip, and Netease Koala overseas purchase have supported with Apple Pay for users.

Besides Apple company, Chinese mobile manufacturers including Huawei, MI have already actively cooperated with CUP and expected to land with the platform of CUP. CUP has already promoted NFC products in as early as 2012, however NFC payment has strict requirements on hardwares, the long industry chain needs mobiles, POSs and commercial tenants with NFC function along with a high extension cost , therefore it could not be spread rapidly. Whereas, facing the big cake brought by mobile payment, Chinese mobile manufacturers including Huawei and MI notice the new opportunity brought by NFC. Based on the latest mobile payment industry report issued by counseling company Ovum at the beginning of 2016, by 2019, there will be 1.09 billion people around the world who will use NFC payment services, 939.1 million of them accomplish payment through NFC. Recently, Chinese consumption customs greatly depend on smart phone in their hand. Therefore, how the competition pattern in the Chinese mobile payment market will revolute in the future will depend on whether the active cooperation between CUP and mobile manufacturers can change the existing customs of the smart phone users.






尽管支付宝和财付通凭借背后的集团优势几乎将中国移动支付市场分割完毕,但中国银联仍然没有放弃蛋糕的争夺。自苹果手机携Apple Pay落地中国后,现有的中国移动支付市场格局可能在短期内在一定程度上受到冲击。2016年2月18日,Apple pay正式登陆中国大陆市场,而前一天,包括广发银行、建设银行和中国银行在内的中国国内多家银行已经发布了将全面支持Apple pay的消息。此次Apple pay进入中国国内市场可谓来势汹汹,苹果公司已携手中国银联,与20多家银行展开合作。据业界预测,Apple Pay进入中国后,其近场支付的首要潜在客户将会覆盖千万级的用户群。在商家层面,目前众多线下商家和电商平台、APP等都已争相宣布与苹果支付展开合作。目前,包括新美大、携程、易到用车、网易考拉海购等都已支持用户使用Apple Pay。


Written by Yan Xue, LG CNS Blog’s Regular Contributor

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