![]() ![]() Source: FTīoth companies have since leveraged the massive uptake of their app-based online payments products to successfully move into merchant payments. Recent numbers suggest that the vast majority of the $5.5 trillion mobile payments made in a year were handled via QR code on WeChat Alipay apps. WeChat Pay and Alipay introduced proprietary versions of QR codes in 2011 and, by 2016, more than $1.65 trillion in transactions used the codes. Much of this growth has taken place on the back of quick response (QR) codes, which were invented in Japan in 1994 but never really gained traction until taking off in China. More than 20 million users make purchases every day through WeChat Pay, and 200,000 people sign up for the service every day. With monthly active users of over 500 million (Alipay) and 900 million (WeChat Pay), they have created a massively valuable mobile payments market that they completely dominate ( 93 percent of the mobile payment segment is controlled by the two). These two mobile payments products have rapidly reshaped China’s payments landscape. In 2013, it integrated Tenpay into WeChat, creating WeChat Pay-a payments product embedded in WeChat that enables users to send each other money directly through the messaging platform. ![]() The social aspect of its business model remained central to Tencent’s business, and in 2011, it launched WeChat, a smartphone-based social messaging application that became even more popular than QQ. To support that business, it introduced online payments brand Tenpay in 2005. Today, Tencent is one of the world’s largest gaming companies. Building on that success, the company pivoted into online gaming-a space that heavily relies on online chat. Founded in 1998, it quickly became China’s leading player in online messaging through its blockbuster chat product QQ. Tencent, on the other hand, entered the payments space from a different angle. While it took Alipay five years to reach 100 million customers prior to 2008, it added 20 million new users in the first two months of 2009. In 2008, Alipay officially introduced its mobile e-wallet and launched Alipay’s meteoric growth. To resolve that issue and drive greater volumes on its platform, in 2003 the company introduced Alipay-an online digital payments solution based on escrow, where Alibaba held the money until the buyer signed off on receiving the goods. ![]() One of the challenges it faced in this early e-commerce market was the lack of trust in online transactions between strangers. In many regards, this success is thanks to two Chinese tech juggernauts whose brands now reverberate around the world: the e-commerce giant Alibaba and the gaming company Tencent, with its social media platform WeChat.Īlibaba started in 1999 as a business-to-business e-commerce platform that required users to pay via their bank accounts. Photo: Sudipto Das, 2015 CGAP Photo Contest Ma Qin, 65, sells handicrafts in the city of Dali, China. This is all the more remarkable because just two decades ago, China was basically a cash economy. Digital payments are becoming so dominant that the People’s Bank of China has had to forbid what it sees as discrimination against cash by merchants who accept only digital payments. The number of people making mobile merchant payments is expected rise to 577 million in 2019 and to almost 700 million in 2022.
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