China Payments Research
China Union Pay Intensifies Competition in the Payment Industry
On December 11th, 2017, China Union Pay (CUP), together with over 30 commercial banks and payment institutions, launched a new version of its mobile payment APP, QuickPass (云闪付), starting a new battle in the mobile payment industry.
The third-party payment industry is in an integrative stage
The People’s Bank of China (the PBOC) started issuing the Payment Business License since May 2011 to non-banking institutions. Up until March 2015, the PBOC had issued 270 payment licenses.
So, What's Next For Ant Financial?
Ant Financial is well established as the largest fintech in China. These past two years have been excellent for the company as they reached 450 million users with an average expenditure of 16,000 RMB through the Alipay platform. They recently started to make use of Alibaba’s acquired controlling stake of company Lazada in Singapore, which has given them access to most of the SEA market. In addition, Ant bid for Moneygram in the United States, and funded bike sharing service Gobee.bike’s launch in Hong Kong (being the first bike sharing company of the kind launched in HK). However, the important question here is: what awaits the company in the near future? Three words. Diversification, internationalisation and experimentation.
QR Codes helped define Alipay and WeChat Pay, but now they might be their biggest challenge
QR-codes have been a boon for China's 3rd Party Payment providers, but due to QR-Code standardization and the launch of China's Online Settlement Platform for Non-Bank Payment Institutions, more colloquially known just as Wanglian, QR-codes could now be the payment giants' biggest challenge.
On the last day of March 2017, Wang’lian (Internet Payment Union) started its trial operation after one year of preparation. The first group of companies that have joined the platform include: Wechat Pay, China Merchants Bank, Bank of China, and Chinabank Payment. The platform will effectively cut the 3rd party payment networks of Ant Financial and Tencent, and is likely the most important payment industry development this year, and it may not bode well for China's dominant digital payment companies.
Last week, at The Fifth Session of the twelfth National People's Congress in China, Mr. Zhou Xiaochuan, the chief governor of People’s Bank of China (PBOC), encouraged the development of Fintech during the press conference among all topics about finance reform and development in China.
In its recent mobile app update, Alipay has put its QR code for accepting payments away from the main screen to a separate button on the top right corner. This seemingly small technical change has operational and business implications too.
Last Friday, the People’s Bank of China (PBOC), China’s central bank, issued a new notice for the third party payment companies which will be enacted on April 17th, 2017 and will require the payment companies to deposit around 20% of the held customer fund to specified general bank accounts.
Will Alibaba's Circles incident slow down the development of the credit score industry in China?
The first batch of Chinese credit scoring companies has been waiting for their licenses for 24 months now. What are the reasons for the delay and how has the recent Alipay Circles incident affected the formal launch of the industry?
China gives up on NFC, goes QR
NFC standards have been agreed and in place for just over 5 years in China, but have made little headway. On Monday this week, China UnionPay launched their own QR code solution. China UnionPay was one of NFC's primary supporters, so this shift to QR could mean the end of NFC in China.
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Wang’Lian, the new clearing house for digital payments in China
Since the start of this year, there have been many news about the set up of “Wang’Lian”, which means Non Bank Internet Payment Union, in China.
This week, the Internet Banking Union (IBU) was approved by China’s central bank the People’s Bank of China (PBOC) thus creating a 'Digital Union Pay' that may bring cross-platform interoperability to digital payment platforms including Alipay and WeChat Pay. The platform is expected to launch by the end of the year and may bring a big change in the digital payment industry in China.
The recent wave of Alipay partnerships with merchant acquirers has spanned the globe. With the common goal of letting Chinese tourists pay with Alipay, one of their favorite payment methods, Ant Financial has partnered with Wirecard in Germany, Ingenico in France and First Data in the US.
With November 11th right around the corner, we will soon be in the midst of the China's largest shopping day of the year. The real question will be what happens this year. We know that e-commerce sales will be huge, but will Alibaba be able to beat their 91.2 billion RMB ($18.8 billion) 2015 singles day turnover and set another global record for the largest one day GMV sales?