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Competition between “code-sweeping” and “flash pay” in mobile payment field

Time:2016-05-19 Click:269
In 2016, China’s mobile payment market is particularly busy: On the one hand, Apple Pay and Samsung Pay enter Chinese market. Huawei launches Huawei Pay while MIUI join NFC CAMP; on the other hand, Alipay, WeChat purse, baidu's wallet continuously expand off-line payment and try to attract users by random reduction. Under the powerful promotional campaign , China mobile payment changes from former competition between 13.56MHz and 2.4GHz to market competition between for users and merchants .At the same time, industry structure of mobile payment is gradually clear:”Code-sweeping” group using Ailpay and Wechat purse has obvious advantages.NFC “Flash pay” using Unionpay, mobile phone manufacturers and operators also keeps up with “Code-sweeping”group.


"Code-sweeping"group advances triumphantly


"Flash payment” and “Code-sweeping” use two different payment methods. The former is based on NFC and as long as user owns NFC mobile phone, the user can complete payment on POS machine supporting NFC. Normally, password is not required and the payment procedure is convenient. The latter belongs to on-line payment. The code-sweeping tool is needed and payment is completed after typing in the passwords. Sometimes, users need to manually type in amount and the payment procedure is complex.


Although “Flash pay” is slightly better in payment procedure, users need to change mobile phone and open application and merchants need to be equipped with special POS machine, which makes it less attractive. Relatively, “Code-sweeping” just needs user to install application procedure and link related payment account, which makes it easy to use. Besides, in the past two years, Alipay and Wechat invest a lot in promoting the market to expand user scale, for example, Alipay and several supermarkets jointly promote “50% discount by using Alipay”, Wechat and several fast food restaurants, cake room jointly promote “give a maximum discount of RMB 20 yuan on Tuesday” , attracting a lot of users.


"Code-sweeping” group has relative advantage on user base. Take Wechat for example, the payment relies on Wechat Purse. With the popularity of Wechat and “Wechat red envelope”, not only young user groups but also elderly group open WeChat wallet. According to statistics, until end of January this year, monthly active user has reached over 650 millionand users binding bank account with Wechat is more than 200 million. What’s more, Wechat introduces one over one thousand fee, making user more willing to use up the money in Wechat purse and further improving user viscosity to Wechat pay.


According to Analysys’ statistics, in 2015, in China’s third party mobile payment market, Alipay ranks top with 72.9% market percentage, while Paypal ranks second with 17.4% percentage, both of which occupy 90% of mobile payment market, becoming two giants in third party payment market.


"Flash pay” renew with enthusiasm


"Code-sweeping” group advances triumphantly but “Flash pay” group is declining. After several years’ game, China Unionpay and operators reach agreement of NFC-SIM, but is difficult in promoting market.


This situation change in 2016. On Feb.18, 2016, Apple Pay is officially launched in China, re-stimulating the market enthusiasm. In end of March, 2016, Samsung Pay is officially launched in China, intensifying market competition. Then, Huawei and Bank of China jointly put forward self-payment service for own mobile phone: Huawei Pay, representing Huawei’s step into mobile pay market. After that, MIUI’s newly launched mobile phone: MIUI 5 is also equipped with NFC function. With the attendance of mobile phone home and abroad, mobile payment market peaks to a new round of development, making NFC group rally.


Operators committed to the NFC market Strengthen the efforts. China Mobile plan to expand NFC user to 10 million and promote NFC traffic application in more than 100 cities and promote NFC application in over 100 schools and enterprises. In order to raise partners’ passion, China Mobile launch “NFC mobile phone factory and NFC-USIM card to form a complete set of packaging to provide each user RMB 15yuan”


Of course, NFC’s speed up cannot hide the problem: NFC industry chain is broader, involving China unionpay, operators, mobile phone manufacturers but all the parties have their own thoughts. The division of interest structure and competence for dominance are the problems which are unable to avoid.


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