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Recently, China’s retail payment world has experienced a rethink. This, as two new payment systems have come to dominate person-to-person, retail, and many business transactions. This new system is built on digital wallets, QR codes, and runs through their own big tech firms: Alipay running through Alibaba and WeChat Pay running through Tencent. As a result, banks have largely been disintermediated from payment transactions, being robbed of a major, long-standing source of revenue. It creates an alternative payment ecosystem with different incentives between merchants, consumers, and payment system providers. It challenges the placement of payments on the side of banking as opposed to commerce. This system creates new incentives that could realign existing business models and relationships between merchants, banks, and technology providers. With over a billion users on each platform, the power of network incentives and partnerships has been unleashed. The new payment system has replaced cards and cash at registers, how families give gifts, and even how beggars ask for money – with QR codes replacing tin cups.
As a result, banks have largely been disintermediated from payment transactions, being robbed of a major, long-standing source of revenue. It creates an alternative payment ecosystem with different incentives between merchants, consumers, and payment system providers. It challenges the placement of payments on the side of banking as opposed to commerce. This system creates new incentives that could realign existing business models and relationships between merchants, banks, and technology providers.
With over a billion users on each platform, the power of network incentives and partnerships has been unleashed. The new payment system has replaced cards and cash at registers, how families give gifts, and even how beggars ask for money – with QR codes replacing tin cups.
