How far has U.S. mobile payment fallen behind China

When Apple chose China to be the first Asian market to expand its mobile payment service Apple Pay to, most China watchers knew the iPhone maker would face stiff competition in the country’s already-crowded mobile payment market.

Mobile payment became popular in China in 2013. Alibaba developed Alipay Wallet independently in November 2013 as the number of people using Alipay on their mobile devices rose to 100 million, according to Sina Tech. Alipay, developed in 2004, originally existed to provide online payment service for Alibaba’s marketplaces: Taobao and Tmall.

Tencent followed suit to launch WeChat Payment in March 2014, providing a mobile payment service for WeChat users. WeChat, with its 650 million monthly active users, is the world’s fourth most popular messaging app after WhatsApp, QQ Mobile, and Facebook Messenger as of January, according to statistics firm Statista.

A month after the birth of WeChat Payment, Baidu also set up its version — Baidu Wallet — in April 2014. Because Baidu was a latecomer, it’s not even in the top five mobile payment services by transactions according to Internet data research firm Analysys. Most users are already divided between Alipay and WeChat Pay.

Alipay has 71.5% of the market share. Alibaba said in its January earnings report that the combined mobile monthly active users of Taobao and Tmall are 393 million. The company also reported over 270 million registered Alipay Wallet users last April. WeChat Payment takes up 15.9% of the pie, with over 200 million users linking their bank cards on the platform, according to Tencent’s 2015 third quarter results.

In the U.S., however, mobile payment is not as ubiquitous as it is in China. Google, Apple, and PayPal are all trying to change the game by promoting the concept of digital wallets and cashless payment in America.

According to a Gallup business journal published in July 2015, only 13% of U.S. adults have a digital wallet on their smartphone. Google first launched Google Wallet in September 2011, followed by PayPal six months later with their release of the mobile app PayPal Here, in March 2012. Two years later, Apple Pay went live in the U.S. in October 2014.

PayPal also went one step further by acquiring mobile payment processor Braintree in September 2013. Almost a year earlier, Braintree had purchased Venmo, a mobile app that lets users send and receive money to and from their friends.

Venmo is perhaps the mobile payment service platform that the U.S. has most closely resembles Alipay and WeChat Payment. No near-field-communication-enabled devices are required, mobile data or wifi is needed for transactions, users can split bills between friends, a digital wallet balance can be maintained, and money can be deposited in a user’s bank account.

Google, Apple, and PayPal are the top three digital wallets among U.S. consumers, according to the same Gallup business journal. But there isn’t a clear winner here: the journal said Google Wallet has 35% market share followed by Apple Pay with 24% and PayPal with 22%. Venmo only garners 3% of the market share.

Gallup said the top reasons for the low digital wallet adoption rate in the U.S. are security concerns such as hacking and losing phones, unfamiliarity with digital wallet technology and no strong incentives to switch from credit or debit cards.

China is a mobile-first country. A government report from January shows 90% of Chinese access the Internet via mobile devices. The Middle Kingdom seems to have pushed ahead of the mobile payment game with more players joining the competition.

This story was published on AllChinaTech.

Leave a Reply

Your email address will not be published. Required fields are marked *