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Mobile payments – Learning from the Chinese example

When it comes to mobile payments, China is leaving the rest of the world standing. The trillions of dollars in mobile payment transactions that were carried out by Chinese consumers between January and October 2017 is staggering, particularly when compared with the considerably more conservative mobile payment numbers in the US and Europe.

China mobile payments

Mobile payments – Learning from the Chinese example

In fact, research by Juniper in April indicated that Europe was lagging behind almost every other region in its transaction value forecast, and Forrester too has predicted that European mobile payments are likely to be just over half the value of those in the US by 2021 – writes Ralf Gladis, CEO, Computop.

The success of this payment mechanism in China is largely driven by consumers’ adoption of popular mobile wallets like Alipay and WeChat/Ten Pay, which account for the majority of the mobile payment market and satisfy consumer -and retailer – desires for convenience when paying. Adoption of mobile wallets in the UK, such as Apple Pay, Google Pay and Samsung are growing, but at a slower pace.

Traditionally it has been challenging to bring about change when it comes to consumers and payment behaviours. The attachment of consumers to their mobile phones, however, provides a platform that, with the right motivation, allows retailers to capitalise on a massive growth opportunity and realise the considerable cost savings that mobile payments present.

So, what can UK and European retailers learn from China’s success in mobile payments, and how can they can apply these learnings to their businesses? Following are some considerations:

  • Consumer preference is key.  Chinese consumers want to pay with their preferred method of payment.  And that often means whatever wallet best suits their needs at a particular time.  Many Chinese merchants accept more than one wallet as a method of payment, so consumers can choose which to use based on the promotions and incentives offered.  European retailers and brands should consider accepting several wallets as means of payment.
  • Ease and convenience are priorities. In China, through the use of these kinds of wallets, payment can easily happen via QR code. It’s much easier to pay with a quick scan of a QR code than fumbling around for a credit card, debit card or cash. Offering convenient options like these to European shoppers can help retailers drive payments via mobile devices.
  • Social plus shopping keeps users engaged. WeChat/TenPay is quickly gaining ground on Alipay in China by including online shopping and e-payment into its widely used instant messaging app.  This helps to keep users on its platform, rather than going elsewhere to shop.

A company recognising the benefits of having a social component – and doing it successfully in the UK – is Venmo.  For a wallet to be successful, it needs to offer a value-add for both the retailer and the shopper. For the retailer and brand, it can be used as a marketing tool to attract more shoppers either through discount offers, suggestions or review features in the app itself. Consumers benefit from these discounts and can share their shopping experience with their social network. This creates a win-win scenario for both sides.

Online retailers need to think carefully about how mobile payment will interact with their own website, which needs to be fully optimised so that customers receive a seamless experience when checking out. It should offer the right mix of options that match the most popular mobile wallet payment methods, and support multiple devices. Customers should be able to save their preferred payment type and the website will direct the customer during the order process back to the mobile wallet on their phone, which will already have additional information such as the delivery address securely stored.

When it comes to keeping payments secure, unfortunately nothing is bulletproof, but mobile wallets are more secure than credit cards. Consumers using Apple Pay, for example, are asked to use the Touch ID fingerprint sensor which protects Apple Pay against unauthorised access and prevents misuse. The biometric authentication also speeds up the check-out process for the consumer.

There is still some education to be done amongst consumers to build trust around the use and benefits of mobile wallets. However, given that retailers receive money more quickly and more easily, and that wallets typically offer low fees and don’t generally have chargebacks, unlike credit cards, retailers should certainly be making mobile wallets an acceptable payment option. Customers are loyal to, and often influenced by, retailers and brands, and now is the time to be exercising that influence to speed up the adoption of mobile wallets to everyone’s benefit.

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