China may dominate the future design of consumer payments, bloomberg reported Wednesday.
Compared with traditional payment methods in the west, mobile payment in China is cheap and convenient.
It may not be New York or London that designs consumer payments in the future, but China. There, money flows through the two digital ecosystems, combining social media, business and banking operations, run by two of the world’s most valuable companies. An endless stream western executives, bankers and credit card business in China are now with the same anxiety return: in China, consumers can easily at low cost to complete the payment, don’t need these western bank payment system.
For the financial industry, science and technology company, no matter from China or the amazon or facebook and other local giants – copy pay treasure in the United States and the success of the micro letter in China, will be a nightmare.
In China, money flows mainly through two “digital ecosystems” (WeChat and alipay) that combine social media, business systems and Banks, the report said.
In fact in addition to pay treasure and micro letter, China has many businesses have their own payment system, these payment systems for businesses to save more cost, but also play a positive role in the field of global business.
This is in stark contrast to the United States, where many companies have high payments to customers.
As a result, American bankers and senior executives at credit companies who have been to China have come back with anxiety that without these companies, payments would be cheaper and easier.
When making payments through an app, American payments are more typically tied to Banks and credit CARDS.
In addition, Chinese consumers are storing more savings in payment apps. This is another sore point for Banks. They have always held customers’ savings and used that money to lend to foreigners for a handsome profit. If us consumers follow the Chinese example, Banks will have to find other, and potentially more expensive, sources of funding.
The report also produced a detailed chart showing the differences between China and the us in mobile payments.
Alipay and WeChat are highly active users, with 520m and 1bn monthly active users respectively, the report said.
According to Aite Group, a payments consultancy, consumers sent more than $2.9 trillion into the two systems in 2016, equivalent to half of all consumer goods sold in China.
By contrast, us consumers still rely on Banks to pay most of their non-cash payments, whether by check, debit, credit or other payment systems tied to bank accounts.
Related to this is a wallet and payment system operated by PayPal, apple Google and others. From a businessman’s point of view, too many American systems waste a lot of money.
Whether which science and technology, the success of the company will pay treasure or WeChat “copy” to the United States, would be bad news for the U.S. financial sector, because of the possible each year from big Banks and take away billions of dollars in revenue.
What if Chinese apps were used as a guide after “alipay” or “WeChat” appeared in the us?
Perhaps most obviously, technology companies will take a cut of the fees American merchants pay to accept credit CARDS and mobile payments. About $90 billion a year, according to the Nielsen report.
Analysts expect third-party payment providers in China to receive about 40 per cent of such fees by 2020. If the application is started to grab market share in the United States, with China’s market share is roughly same, so from a commercial bank’s income up to $43 billion, this would be one of their most lucrative business.
Financial firms could lose billions of dollars if the U.S. follows China’s lead in accepting third-party apps.
But it’s just a way for us Banks to charge fees and generate revenue by issuing money. If payment apps replace paper money in the United States, as in China, another form of revenue could suffer.
Source: bloomberg and other websites