The growth of technology has covered almost all kinds industry and the mode of payment is also digitalized and the service is operated through the financial regulations and the transaction takes place using the mobile phones. Mobile phones are used by more than half of the population in the world and the data connectivity is also available to the public which make mobile payment a best and safe process.
The consumers can use the mobile payment platform to pay for different kinds of services instead of using the credit cards or cheque or cash. Even before thousands of years ago our ancestors have used the no-coin system and now the technology is trending with a technical niche. This payment platform is adapted by different countries across the globe and in 2008 a combined mobile payment was projected and it reached sixty billion across the globe by 2013. And the mobile payment service seems to keep increasing over the years and it will result in sharing the revenue that might increase up to nine percent by next year.
Many of the developing countries in the world have employed the mobile payment service as a means of extending the financial services to the community called the under banked or unbanked that values the adult population around the world. Moreover the idea of using the mobile platform has attracted many of the private and public funding organizations in the developing countries. The mobile payment service is now a key instrument for the payment service provider (PSP) and other people in the industry. Also the European Payments Council (EPC) has stated that the technology provides an improvement in the operational efficiency that saves the cost and increases the business value.
Types of mobile payment
There are different types of mobile payment and they are,
- Direct transfer between the payer and the payee account (this is model led by the bank and transactions involve inter and intra bank transfers and bank led model).
- Card based payment
- Contactless payment Near Field communication (NFC)
- Mobile Wallet
- Carrier billing (direct carrier billing or premium SMS)
The mobile payment service also has combination of mobile payment, like
- Both the card and bank account like the MobilePay and Vipps, where the users having account in the particular bank can debit using their account and others can debit using their card.
- Direct bank or carrier co-operation in the Haiti
The mobile payment solution was implemented by the mobile network operators, credit card companies, financial institution, internet companies like Google, Blackberry and telecommunication infrastructures like the handset multinationals- Ericsson and w-HA from Orange.
Payment platforms under direct attack in China
China has the largest population and many technology companies use it as a best way to grow their business and the country paves way for it. Some of the companies in the country influence their presence in certain industry by dominating the market, for instance- Tencent has made gaming and other social as its call, while Alibaba owns the ecommerce platform. And with the growth of the tech giants in this business it becomes inevitable to overlap these companies.
With the growth of the mobile technology increasing more than two hundred percent year on year by the last quarter of 2016, when it reached one hundred and eighty six billion US dollars and also the mobile payment prevailed as a key access point to the consumer data in the country, where most of the online transactions in the country takes place via the mobile phones. And Alibaba’s financial affiliate Ant financial dominated the market for a long run via its mobile wallet- Alipay.
- Most of the companies in the online platform have the mobile wallet option like Google Wallet, Amazon Payments, Alipay and PayPal.
- When the user uses the mobile payment for the first time, the user must register by providing the provider with their mobile phone number and the provider will send the PIN number via the SMS.
- The user has to enter the PIN number and authenticate the number.
- Then, the user has to key in their credit card details or other alternative payment method and validate their payment.
- Next time when the user uses the mobile wallet, they can simply key in their PIN to authenticate and validate the transaction process.
Payment solution slowly slipping away
Alipay is the mobile wallet system of Alibaba was launched in 2009 and was the first service to offer mobile payment solutions and it owned about eighty percent of market continuously for 5 quarters at a stretch, starting from the 3rd quarter in 2013. However, the stronghold of the service in the industry is gradually slipping down because of a new payment option.
One of the reasons for the slip in the business is because of the competitor WeChat Pay that was launched in 2013. This is a payment mode associated within the messaging application WeChat that is predominantly used by most of the people in China. The mobile payment report for the last quarter for 2016 was released and according to the report the newly emerged mobile payment platform WeChat Pay that is part of Tencent ranked second with thirty seven percent and Alipay’s share was 54.7 %, though Alipay dominated the market with more share and high transaction amount, Tencent was able to showcase the increase in the number of active users that has doubled within the last quarter.
Alipay is influential over the ecommerce industry, but WeChat is gaining the payment service because of its hold on the social interaction platform. To be particular, WeChat had capitalized most of its new popularity by introducing the red packet filled with cash gifts- a traditional culture of China. According to the new plan, the company debited its virtual packet and allowed its users to send twenty nine US dollars to their family and friends present in the messenger platform WeChat. And with the red packet exchange the company saw about sixteen million mobile payment exchange during the Chinese New Year Eve in 2014 and in the following year the red packet gifting reached one billion.
With the red packet exchange the company reached higher heights and the prototype of the company became ‘WeChat red packet’. Following this, booth WeChat and Alipay introduce different tactics into the payment platform to attract new customers every year by providing e-coupons and red packet gifts. The recent tactics by Alipay was introducing the famous game in its platform, the augmented reality game Pokémon Go – where it intricate the users to chase the red gift packets.
However, both the mobile payment platform does not make money through the peer to peer payment system, including the red packets. But, WeChat gained popularity because of implementing the tactics early in the user base and though it does not dominate the ecommerce platform, WeChat was able to tap millions of new users to its platform to use the mobile payment system WeChat Pay and now the company can concentrate on the online service and connect it with their users.
With potential ideas and discounts, WeChat is able to attract millions of active users towards its platform and has become the leading rival to the traditional mobile payment provider Alipay.