Take the credit card swipe versus chip example. The chip is an improvement over the really old swipe tech in theory. In the US, using the chip is a terrible experience because it takes a lot longer for the process to complete. Why? Because merchant processors have no interest in putting the chips on a fast network because they can get higher fees on the swipe and conversely the stores are charged higher fees for enabling the chip. There you go. There's the moral question and the profit question all in a real example that didn't improve the experience for the end user.
In Urban China, Cash Is Rapidly Becoming Obsolete
51–60 of 359 posts
Re: In Urban China, Cash Is Rapidly Becoming Obsolete
#52Everyone in Australia just uses paypass/paywave contactless payment with their credit cards. I rarely carry any signifiant amount of crash for that reason. It's essentially the same as using your phone except you use your credit card and doesn't require a PIN or anything for signature is no longer allowed.
Without having used WeChat's approach with QR code scanning, it doesn't seem that different for the end user in practice. Either way, you're scanning an object you carry against some target environment and a merchant is processing the transaction for you. It's even closer once you use eg: Apple Pay with your CCs loaded into the Apple system - you're tapping your phone rather than scanning via the camera.
I'm guessing that the CC infrastructure simply wasn't there and pushing out EFTPOS units was a far higher barrier to entry than simply running an app on your newly acquired cheap chinese smartphone. As such, the CC merchants missed the boat whereas the big phone app companies got in on the ground floor. On the flipside, many Western countries had all the EFTPOS terminals already, so contactless just became the next iteration on that.
I don't really necessarily agree with the problem of the country building their commerce systems around Tencent, etc. as 'private companies' since most of the west hinges on Visa, Mastercard and to a lesser extent Amex. They're all private companies too. Maybe the government will step in and standardise the QR code system eventually to reduce the risk. I don't really see it playing out much differently to how the West did with CC contactless.
Re: In Urban China, Cash Is Rapidly Becoming Obsolete
#53I had the most surreal experience in the Shenzhen airport the other day. I was out of cash, with only my credit cards and Android pay. There was no place in the entire airport that I could pay with Visa or Mastercard - the first time I felt truly helpless in China. Uber didn't work either. I was forced to set up WeChat pay, which works absolutely everywhere.
Where I see the cashless innovation failing deliver is where there is a state-owned enterprise providing a service. I was in Shenzhen on the weekend and had to use cash to pay for a one-time use token to catch the subway. Lining up to pay took a good 20 minutes by itself.
The Shenzhen subway seems like an exact copy of Hong Kong's MTR, which uses the excellent and ubiquitous Octopus system. The MTR is its own entity and allowed to play favourites (or enable monopolistic behaviour).
Re: In Urban China, Cash Is Rapidly Becoming Obsolete
#54I think this is a good illustration of the different approach in how China and America approach the consumer economics space. In America, there is a very heavy reliance on "trickle down". We create a "best-in-class", "top-of-the-line" product that only the elite and wealthy can buy into. These people then set the tone of how it will develop in the future. The first mover also tries to do everything in their power to…
Android was released a couple years after the iphone and it has defined the low end market. From the USA. A big reason why QR codes caught on in China is because everything else was really bad. In america, credit cards were 'good enough' compared to what was in china, so QR codes didn't catch on that quickly. Also because it's a wealthier nation, the typical merchant could afford the hardware required for processing…
I'm a Chinese & living China, I shopping almost only with credit cards and cash for privacy consideration.
However, I don't think credit cards in China are as popular as it is in the USA. I could guess most Chinese people don't have any credit card.
Chinese traditional culture encourages saving, not loaning. And taking small loans is exactly how credit cards works. So maybe that's why people here don't like credit card very much.
QR pay (Or mobile pay, OR more specifically, Alipay and Tenpay etc) can acting like a gate way between seller, user and bank. It can pay with the money you already have, no need to loan from the bank. So I think it's a Culture Match.
Beside that, take a wallet (Which is needed for protecting your credit cards from been scratched) everyday is a burden. I could really be happier if I can get rid of it from my EDC (I can't get rid of my phone, so).
Re: In Urban China, Cash Is Rapidly Becoming Obsolete
#55Is this faster than PayWave? Ever since I could tap to pay with my card in AU, I have been going months without using cash. I usually still have money, but never use it. I've gone almost 2 months with literally 0 dollars in my wallet.
Contactless payment systems are prevalent in Australia. And even before tap to pay we were able to insert cards, enter a PIN and pay. What has happened in China is that they payment systems have been baked into the apps where, in Australia, this occurs at the terminal (EFTPOS as an example) which is app agnostic and tied directly back to the bank gatewys.
Re: In Urban China, Cash Is Rapidly Becoming Obsolete
#56Born in China and moved to U.S. since college. In my observation, there are several reason for the boom in mobile payment in China that makes it hard to replicate. - Low transaction fee & minimal barrier. For merchants taking WeChat pay, the transaction fee seems to be a flat 0.6%, compared to 2%-3% in the U.S. For the food cart vendors and similar one man shops, they just use the person-to-person payment feature (li…
> the transaction fee, for many, is perceived as a rip off
Only if you're a merchant. Most of the 2-3% fee is transferred to consumers via reward programs. It's important to understand that merchants and consumers face different incentives and that US card networks have aligned themselves with consumers.
Re: In Urban China, Cash Is Rapidly Becoming Obsolete
#57I recently took a trip to Shanghai and Kyoto and was blown away by this. In Shanghai even the taxis displayed their QR to accept payments. Kyoto accepted WePay and AliPay; the latter was most impressive because I was told AliPay requires the Chinese equivalent of a SSN
Re: In Urban China, Cash Is Rapidly Becoming Obsolete
#58Earlier quoted context omitted.
No, this is very strange actually. At least Starbucks would take credit cards, and you should be able to find an ATM that takes your USA-based ATM card. Never had this problem before. I did feel screwed when I arrived in he Netherlands thinking my unionpay card to work, just to find out it was one of the countries besides India where it didn't. Thankfully, I could find some place that took credit cards...but I was fr…
Germany also doesn't really take credit cards. Well, didn't. The EU limited fees for credit cards to 0.125% recently, and while EC (now bought by MasterCard and called Maestro for SEPA) is still cheaper, credit cards start being affordable for merchants. But almost none support it yet. And Google still hasn't launched Android Pay, despite every ALDI having NFC. I'd prefer if there was a local NFC payment option actua…
Germany's aversion to credit cards is somewhat cultural, isn't it? Datenschutz, Datensicherheit, etc.
Re: In Urban China, Cash Is Rapidly Becoming Obsolete
#59I think this is a good illustration of the different approach in how China and America approach the consumer economics space. In America, there is a very heavy reliance on "trickle down". We create a "best-in-class", "top-of-the-line" product that only the elite and wealthy can buy into. These people then set the tone of how it will develop in the future. The first mover also tries to do everything in their power to…
Android was released a couple years after the iphone and it has defined the low end market. From the USA. A big reason why QR codes caught on in China is because everything else was really bad. In america, credit cards were 'good enough' compared to what was in china, so QR codes didn't catch on that quickly. Also because it's a wealthier nation, the typical merchant could afford the hardware required for processing…
"Android was released a couple years after the iphone "
This is a really interesting history rewrite, since it was released a year and 3 months later.
It also didn't define the low end of the market, since at that point, the iphone was just getting apps (2 months earlier is when the apple app store was released)!
Re: In Urban China, Cash Is Rapidly Becoming Obsolete
#60I think this is a good illustration of the different approach in how China and America approach the consumer economics space. In America, there is a very heavy reliance on "trickle down". We create a "best-in-class", "top-of-the-line" product that only the elite and wealthy can buy into. These people then set the tone of how it will develop in the future. The first mover also tries to do everything in their power to…
Amazing. Do you have any more examples following this Chinese model besides smartphones?
edit: got downvoted. I guess not