Who can become America’s “Alipay?” U.S. mobile-payments market remains sluggish

Although tech giants want to open up new markets for mobile payments in the United States, from Alibaba to Samsung to the nearest Facebook and Apple, the brutal reality is that Americans still prefer to spend their cards.

Data released by consumer research platform CivicScience shows that U.S. adults prefer to use debit CARDS, followed by credit CARDS, cash and checks. Mobile payments are not only at the bottom of the list, but have been a tiny part of it since 2015.




John Dick, the platform’s chief executive, says the dominance of CARDS in how americans pay reflects a trust in the banking system that far outstrips that of technology companies, and the gap widened in 2017.

U.S. mobile payment market share is less than 1% of China’s

Although the United States has a well-developed financial services and consumer industry, but daily mobile payments are still “lame duck.”

Total U.S. mobile payment transactions are estimated at $49.3 billion, less than 1% of China’s, according to eMarketer, a global market research institute.




So far, China is the world’s largest digital payment market, China’s mobile payment market has formed an oligarchic pattern, dominated by Tencent and Alibaba.

Compared with developed countries, China has a lower credit card penetration rate, while online payments with debit cards are cumbersome and often require multiple certifications such as text messages, U shields and random passwords.

By contrast, it is much easier to pay with Alipay or WeChat, simply by scanning a qr code from a retailer’s service point terminal or smartphone.




QR codes have become a widely used means of payment in China, with smartphone users using them to pay bills, spend money in malls and buy shopping from vending machines.

Data shows that the convenience store payment means in China, cash payment accounted for only 11%.

In a separate report, eMarketer said: “the rapid adoption of proximal payments in China is partly due to the advantage of being a late adopter — unlike the us and other regions, China does not have a deep credit card culture. in fact, China has jumped straight from cash payments to mobile payments.”

In addition, both China’s banking system and the construction of telecom base stations have done a lot of things that are loss-making from the perspective of market economy, which laid the foundation for China’s mobile payment and promoted the development of related industries.

In addition to the popularity of mobile payments in China, nearly 75% of supermarkets and convenience stores in southeast Asian countries such as Singapore, Malaysia and Thailand are also embracing mobile payments, according to a recent Nielsen survey.




David True, an analyst at Paygility, an American consultancy, said the weakness in U.S. mobile payments was due to its inability to bring extra dividends to consumers.

The main reason for the slow development of mobile payment in the United States is still the sound credit card system, so what are the benefits of using credit CARDS in the United States? The editor summarizes the following benefits:

1.

The payment system in the United States is perfect. Banks provide reliable and attractive services to credit CARDS，And there are various incentive policies in the initial period of issuance, and some retailers use the credit cards they issue, and there are substantial additional discounts.

2.

many brands of credit cards will be in the initial period of 3-15 months to provide a phased payment of 0 interest rate policy, simply to encourage you to send money before paying the bill, and mobile payment is if you have no money in the card can not be used.

3.Americans like to use credit card to spend money, because almost every transaction has a return of 2~ 5 percent of cash or reward points, which gives consumers a feeling of making money, which is not provided by mobile payment.



4.

credit card theft protection in the United States is very powerful, the United States credit card does not need a password, If it does not belong to the consumer’s own signature consumption, the consumer does not have to pay a penny, so the credit card is not afraid of losing, And once mobile payments are used, if consumers ‘ money is crossed out, they can barely get their money back.

5.

In addition, many credit CARDS have the functions of insurance and claim. For example, for some credit CARDS, the issuer of credit card will reimburse the credit card users for the accommodation, catering and transportation expenses during the flight delay；Some branded credit CARDS offer extra insurance when renting a car and extra compensation if there is an accident, which is not available with mobile payments.

6.

American society does not have pay in time for the demand, credit unions will have trust between people, consumers are used to seeing bills before they pay, from spending shopping to expensive services such as seeing a doctor.

With so many credit card benefits listed, consumers will suffer if they use mobile payment.

Apple Pay, for example, doesn’t do much better in offline Settings than swiping a credit card. That’s the difference between swiping a card out of your wallet and swiping a phone out of your pocket.



Add to that the fact that Americans’ credit-card habits are unlikely to change anytime soon, and many users have concerns about the security of mobile payments. Even though Apple Pay is gaining ground in the U.S., the U.S. mobile payment market is still far behind China’s.

And when Apple Pay first launched in the United States, only a handful of stores supported it, even in the big city of New York. A year later, the use of Apple Pay is still relatively limited. Although the large chain stores have been fully supported, more merchants, especially offline restaurants, still do not support this kind of mobile payment.

Compared with the mobile payment method of scan qr code, the mobile payment represented by Apple Pay in the United States requires matching mobile phone hardware. On the other hand, the retrofit cost of POS machine is high, And the cost of brushing a QR code is almost “0.” That’s why the coverage of mobile payments in the United States is far behind.



Although the United States lags behind the world in the acceptance of mobile payments, this does not affect the tech giants ‘ expectations of the world’s largest consumer market.

Last month, Apple followed Apple Pay by announcing a partnership with Goldman sachs and mastercard to launch its Apple Card credit Card business, which will be available to U.S. customers this summer.

In order to increase mobile payment scale, Apple decides that Apple Card will get 2% cash back when it is used together with Apple Pay, while the proportion of cash back when only using Apple Card physical Card is reduced to 1%.

In the same month, Facebook chief executive Zuckerberg said he saw the future of social networking sites in encrypting information, payments and other services. Facebook, which has more users than Alipay and WeChat, is salivating over the big pie of digital currencies and payments.



Take a look at China’s Alipay in the United States. Since entering the United States in 2016, Alipay has been expanding its business in North America. Now, 80 percent of New York taxis and more than 2,000 taxis in Las Vegas support Alipay. Alipay’s President for the americas, Souheil Badran, has previously said that merchants in urban areas and tourist areas have doubled their acceptance of alipay to drive more mobile payments.

Thad Peterson, senior analyst at Aite Group, a global research and consulting firm, said mobile payments would grab more market share in the US over the next five years; Predictably, tech giants are more willing to tie the bank cards that Americans take for granted to virtual mobile wallets, thereby both developing mobile payments and maintaining the leading position of bank cards in the payment sector.