A number of Chinese financial firms are branching out to embrace mobile payments, The Wall Street Journal reported Tuesday (Jan. 10), with an aim of displacing Ant Financial, owned by Alibaba Group, and Tencent Holdings.
The lure is considerable, as it offers up a $4.1 trillion market as measured by transactions seen in the latest fiscal year, which ended in September, and is marked by a shift by consumers using their phones to make mobile payments ubiquitous. The latest tally marks growth of 106 percent year over year in the third quarter, as noted by Analysys, a research firm. The growth has been driven by offerings such as Alipay, which is owned by Ant Financial, and Tenpay by Tencent. Those two firms, said WSJ, have cornered the market with 89 percent of market share. UnionPay, which has a tight hold on credit card payments, has only 1 percent of the market (and it is owned by the state).
But UnionPay wants, now, to see standardization of QR codes, and that could mean that the payments would be covered by a network effectively dominated by UnionPay. It could be, said WSJ, that such a move, taking aim at those private companies (which use other codes), may mean that UnionPay could gain from the backing of the state, even though no explicit policy has been put forth by the People’s Bank of China. UnionPay has also said that mobile payments may be less reliable than keeping money with banks rather than in virtual accounts.
Other firms, said WSJ, are bringing out new mobile payment systems. Among them, commercial lenders that are pushing mobile banking features that are like those offered by Alipay and its peers, with a focus on money transfers.