‘‘You scan me, or I scan you?” (「你掃我，還是我掃你？」)
The above was the most frequent question I got when I was traveling in China. I did not have a clue what my new Chinese friend was referring to when I heard the question the first time, until he opened the Wechat (微信) app on his mobile phone and showed me the QR Code there. Then I understood that he wanted to scan my WeChat QR Code to add me as his WeChat contact.
Experiencing mobile payment in China
And, I found myself getting the same question at every cashier – in restaurants, street-side eateries, convenience stores, boutiques… I decided to give it go and behave like a local – connecting my China bank account to my WeChat Wallet, which is embedded in the WeChat app, and pay with my mobile phone whenever there was the opportunity (i.e. basically whenever I needed to pay in the major cities), by scanning the QR Codes placed at the various checkout counters, or let the cashiers scan mine. Within one day, I transformed from being a foreigner mixing up the “contact QR code” and the “payment QR code” at the very beginning (and getting strange looks from the cashiers at the local stores), to a true local opening the payment QR code in an expert manner within a second. Paying with the mobile phone in China is so easy and convenient that no wonder now even the aged uncles and aunties use mobile payment in the wet markets. And now when traveling in China, I don’t really use cash anymore.
The omnipresent QR Codes
After having my QR codes scanned multiple times a day, I could not help but noticed that QR codes had indeed become omnipresent in China, with many different applications. For instance, QR codes are now found on literally every advertisement in China, including those on outdoor billboards, posters in the subway and also print ads in newspapers and magazines. Interested individuals can simply scan the QR codes to get further information related to the subject advertisement. I remember one time in Shanghai, I encountered two dinosaur mascots at the entrance of a shopping mall. Each of them had a QR Code printed on their body as well.
On top of providing product and service information, QR codes also serve many other purposes. For example, drivers in China can now park and pay with QR codes. In shopping malls and tourist attractions, visitors can become a member of that location, get benefits and discounts, and also free WIFI connections by simply scanning the locations’ QR codes. Patients in hospitals can now queue by scanning QR codes at the registration counter. Real estate agents and job boards also provide QR codes for respecitve listings. Customers of Starbucks can scan the QR code on the payment receipt to obtain the “fapiao” (China’s official invoice) for tax filing and company reimbursement. I have also found QR codes on the address plaques of historical buildings, and also in elevators… The Chinese are really getting very creative with the use of the QR codes.
QR code is not new. Relevant applications were seen in Japan since the 90s. Nevertheless, its use has not really picked up until WeChat in China embedded the QR code scanner in it’s WeChat app, which now evolved into the “super app” that allows users to make calls, text, share updates (similar to Facebook posting), send documents, pay for almost everything and make P2P transfers, shop, book taxi, hotel, air travel, pay utility bills, subscribe to newsfeeds etc. The consolidated functionality makes the WeChat app almost an integral part of modern Chinese life, and mobile payment the new norm.
QR Codes – The Catalyst for Mobile Payment in China
China has been regarded by many as the land of copycats. Nevertheless, it has gradutely developed its own innovations. In the Fintech area, China is now taking the lead. The China great firewall provided the soil for the rapid growth of homegrown Internet giants, namely Baidu, Alibaba and Tencent (the BAT), and the fierce competition amongst them fueled the innovation race. Thanks to the comparatively lower credit card penentration rate, the Chinese jumped direclty from spending cash to mobile payment, when such applications were made available and handy. The Chinese internet giants, in order to lure as many users as possible into their own camps in the mobile payment space, launched many creative marketing campaignes, such as heavily subsidizing rival taxi apps, to get potential users to form the habit of paying with their mobile phones. The more affortable smart phones produced by the Chinese brands such as Xiaomi, also helped the speedy penetration of mobile payment.
Alibaba and Tencent, with their respective Alipay and WeChat Pay, disrupted and dominated the Chinese payment markets. Banking futurist, Brett King, pointed out that the successful innovation of the Chinese in Fintech lies in their original thinking. When the two companies designed the payment applications, they did not try to patch the existing banking system. Instead, they rethink the whole payment experience from the ground up, or the “first principles”, in Brett’s words. The intuitive and convenient designs that make use of the mobile internet win the hearts of the users quickly.
Today, no matter if you are at a 5-star hotel, or a local eatery selling dumplings, you can pay by using your mobile phone through scanning a QR code. According to a recent research, Alipay and WeChat Pay combined has taken up 80% of the mobile payment market in China.
Traditionally, if a merchant would like to accept non-cash payments, such as credit card payments, they will have to install different payment terminals in the stores. These terminals are expensive to set up (usually several hundreds to several thousands USD annual fee, plus a fixed deposit), and the service providers also charge the merchants 2-4% handling fee for every transaction. These expenses are not low, especially for smaller establishments. The advantage of using QR Codes for payment is that it involves essentially no set up cost, and it is also easy to operate. QFPay, the company that developed the QR Code payment technology in China, can sign up a merchant and have its QR Code payment system ready in 20 mins. Such speed and convenience explain why today even the tiny mom-and-pop stores in China embraces mobile payment in full swing.
The Chinese have also been being the most pragmatic and innovative with the mobile payment capacity. On Chinese social media, we have seen stories of a bridesmaid wore the QR Code tag to collect gift money from the guests of a wedding ceremony in Beijing, and also beggars letting passers-by to give them money by scanning their WeChat payment QR Codes.
Next: The Global Payments Market
The Chinese mobile payment systems, such as Alipay and WeChat Pay have already started entering the international market. They are available in many major department stores and malls in London, Paris and Tokyo, as well as major international airports. Of course, their major users now are still the travellers from China. Nevertheless, as the payment and clearance systems get more mature and accepted by more locations, Alipay and WeChat Pay will start to acquire international users as well, and become the major rivals of Apple Pay and Android Pay.
Privacy and security concerns
With the convenience technology brings us, there are always the concerns on privacy and security. For example, criminals were found placing fraudulent QR Codes on bike-sharing facilities in China, and stole USD 13 millions from affected users’ mobile payment accounts. With more and more of our personal data being recorded and analyzed, our privacy is also unavoidably at stake. How to strike a balance between convenience and security, is an issue everyone in the digital age has to face.