I spoke to ACI’s Lu Zurawski, consumer payments practice lead EMEA, and Andy McDonald, vice president, Merchant Payments Europe, to gauge their views on what the new iPhone means for mobile payments.
Katrin Boettger: Andy, much of the debate has focused on the new Face ID feature of the Apple X. Why do you think this new feature is important?
Andy McDonald: I believe the launch of the Apple X could be one of many inflection points that drives consumers across the globe to use mobile devices as their primary method of payment. You only need to look at China to understand the future of commerce and mobile payments. In the US and Europe, we are still debating the ‘future of cash’ and whether the use of cards will one day be challenged by mobile payments. In China, this discussion is completely irrelevant. Chinese consumers have adopted mobile almost exclusively as their payment channel of choice, as everyone – seemingly regardless of age group – is connected to their mobiles for social, content and service-related reasons.
KB: Lu, what’s your view? Will the future of payments be driven by Chinese consumers’ behavior?
Lu Zurawski: I personally think we can no longer ignore the huge success of Alipay and WeChat and the implications they have for the future of payments and the wider ecosystem. Alipay, the world’s largest online and mobile payment platform with more than 450 million active Chinese users, and Chinese social media platform WeChat with over 963 million monthly active users, are the dominant forms of payments in China today. In just a little over five years, these two digital platforms have changed the nature of Chinese retail payments, and helped hundreds of millions of Chinese consumers move from cash to electronic payments.
KB: Although personally you were not always a fan of QR codes? What made you change your mind?
LZ: I had something of a transformative experience on a holiday to China last summer. It’s quite extraordinary to see how hard it is to spend money with an international payment card in China. And by contrast how many people use WeChat Wallet or Alipay as an alternative. Not just for online, but strikingly at physical point of sale too.
In the photo below, I am trying to buy a shirt using WeChat (having first given cash to a guide, who then let me use her WeChat Pay account – unfortunately WeChat Wallet only seems to be available to those with a Chinese bank account). The retailer (to my left) told me she would never accept cards and that mobile payments now outweigh cash.
By contrast, the next photo shows what it looks like in many shops that previously accepted cards. Multiple unused, dusty card devices waiting for tourists, who quite frankly do not come here in sufficient numbers for retailers to care. Even older Chinese consumers in this shop only seemed to use mobile payments.
KB: Andy, where does this leave the rest of the world?
AM: Learning from China would be a good place to start. Many European retailers have already, or are currently working on, updating their payments infrastructure in order to accept alternative payment methods and at ACI we are helping many of our clients to accept Chinese customer payments. The logic is quite simple: More than five million tourists from China are expected to travel to Europe this year alone, and figures show that Chinese travellers spend more than any other nation on earth when abroad. Merchants in Europe are missing a big trick and a huge opportunity if they don’t develop strategies to integrate new forms of alternative payments and cater to this huge consumer group.
KB: Lu, what’s your verdict?
LZ: The impact of these new payment types will only increase further, particularly as Chinese influence increases in countries such as Singapore, Malaysia and in certain African regions. We are only beginning to understand the implications for the global cards business. Even if we think we are insulated in Western Europe and in the Americas, I suspect there will be a ‘seepage’ of payments behavior. Never mind PSD2 and all that EU regulatory stuff, the Chinese way to pay could hit faster, and accelerate movement away from cards.