Sound Wave Payment – Alipay’s innovation on mobile payment

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Recently, Alipay, China’s largest third-party payment company, released its sound wave payment mobile product, which is the first time that “sound payments” have been commercialized in China. Customers can now pay for goods from the vending machines deployed by Alipay in Beijing’s subway through the sound wave payment.

To use the new payment method, mobile phone holders need to download and install Alipay’s mobile wallet application (users can scan the bar code on the vending machines). Users then follow the instructions on the vending machines to choose the product they want to buy, and then click the “face-to-face pay” option in the Alipay app to send the payment request. At the same time, the “confirm to pay” will appear on the mobile phone screen. When users keep the phone next to the sensor area on the vending machine, the phone will make a “chirping” sound and complete the payment.

According to Alipay, the phone actually sends a unique ultrasonic wave which is only valid for 5 minutes to the vending machine. The machine will then process the wave and generate transaction information. The ultrasonic wave is randomly generated and does not contain any information about users’ account, so there is no issue with sharing personal information or risk that the wave is recorded and used for the next time.

Compared to traditional cash payment on vending machines, this sound wave payment is much more convenient for both users and vending machine providers. More “sound wave vending machines” will be deployed in China’s subways in future and then further expanded into other points of sale in convenience stores, shopping malls and supermarkets.

As mobile internet usage in China continues to develop rapidly, mobile payment has become one of the most promising businesses. Last year the transaction value of mobile payments reached 151 billion RMB, surging by 90% yet still accounting for less than 9% of total internet payments – a sign of its great potential. Apart from third-party companies, the mobile network operators, commercial banks and China UnionPay are also speeding up their development on this area.

In order to differentiate, each player needs to constantly innovate with new products and value-added services. For Alipay, this sound wave payment is a bold attempt for mobile near field payment - customers do not need to change to a new SIM card or integrate any bankcard into its mobile phone. In other words, Alipay can operate this business and process every transaction without sharing its revenue with any mobile network operator or financial institution.

However, payment security is still the biggest impediment for widely spread use of this product. For example, customers may worry about what will happen if they lose their mobile phones. Therefore, we expect that this new product will only support small value payments in current stage and Alipay will further upgrade its product in future.

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