As anyone who has ever tried to pay for something with a mobile app can attest, mobile payments can be frustratingly slow and unreliable. However, a new generation of embedded apps are beginning to change that, by offering a more streamlined and reliable mobile payment experience. These apps are designed to work seamlessly with mobile devices, allowing users to make payments quickly and easily.
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Data for today’s episode is provided by Mercator Advisory Group’s report – Asian Mobile Pays Continue High Growth, But U.S. Market Expansion Stalls
Alipay & WeChat Embedded Apps Drive Transaction Volume:
- Mini-apps embedded within Alipay and WeChat are helping to drive usage growth and retention.
- A mini-app could be an ecommerce retailer’s site, a ride-sharing service, a restaurant’s order-ahead site, a banking and investing app, or even a municipal utility.
- An AliPay or WeChat consumer or business user may use tens, if not hundreds, of these apps throughout their day.
- There are well over a million mini apps available on WeChat & AliPay.
- In 2019, mobile payments consumption in China surpassed $6.5 trillion.
- In 2019, AliPay & WeChat counted over 1.7 billion active users.
- Many users have both the Alipay and WeChat Pay apps and switch between them based on transaction context.
Mega payment apps Alipay and WeChat pay have been gaining traction in the U.S. market through availability at thousands of merchants. COVID-19 plus trade tensions and politics have put an abrupt end to the stream of travelers from China to the U.S. who would use these acceptance locations with their homegrown mobile apps while on vacations, business trips and traveling to the states for academic reasons.
“The Asia Mobile Pays had gained a foothold in the U.S. in-store payments market, until their key target market—Chinese visitors to the U.S.—collapsed. Now that U.S. merchants have seen the cost benefits and purchase transaction simplicity of Alipay and WeChat Pay, they will be looking for the payments industry to bring similar ways to pay to their stores”, comments Ray Pucci, Director, Merchant Services Advisory Service at Mercator Advisory Group and co-author of the report.
These mobile payment services are available only to Chinese nationals and are not a direct challenge to U.S. card networks and issuers, but the similar use of QR code based mobile payments, integrated within a retail app, is beginning to emerge through pilot programs, giving a glimpse of what may come.
“With very low processing costs, quick receipt of deposits and no chargebacks, this payment solution has a lot of appeal to merchants, particularly smaller merchants. Card is still king in many economies and toppling rewards and consumer protections will be a tall order, but apps influenced by the successful Chinese brands will pull some transactions away from traditional payment types,” comments Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group and co-author of the report.