China and India dominate mobile payments, not the U.S.
Historically speaking, the adoption of new technology has been West to East, but when it comes to mobile payments the East is clearly leading the West. This has profound implications for potential winners in the push away from cash, checks and even debit and credit card swipes that is part of our Cashless Consumption investing theme. It also adds context as to why Apple, Google, and others are aggressively trying to move into those markets with Apple Pay and Android Pay to battle Alibaba’s Alipay, Tencent’s Tenpay, and Paytm – to sell more devices. As we’ve noted before, this is especially important to Apple as it remains reliant on iPhone sales.
Silicon Valley is home to the world’s most influential consumer-tech firms, but China’s online corporate titans are way ahead in the race to build mobile-payment services in many of the world’s fastest-growing consumer markets.
China’s digital-payments market, by far the world’s largest, is dominated by e-commerce giant Alibaba Group Holding Ltd. and social-media champ Tencent Holdings Ltd. Now these giants have started transferring money, product advice and technical know-how to mobile money startups in other Asian markets, from Indonesia to India.As people across Asia increasingly move from cash to smartphone apps for buying goods and transferring money between individuals, U.S. firms remain “still very focused on their home market” and trying to increase usage there, said Shiv Putcha, an analyst at research firm IDC in Mumbai.
Mobile payments in China were a $9 trillion market last year, according to iResearch—almost 90 times the size of the U.S. mobile-payment market of $112 billion, according to data from research firm Forrester.Two payment platforms—Alibaba-backed Alipay and Tencent’s Tenpay—handle some 90% of China’s online payments by transaction value, iResearch says. As China’s market matures, Alibaba and Tencent are chasing growth overseas, helping local startups in emerging markets run mobile-money systems that don’t require plastic.
Source: Alibaba and Tencent Set Fast Pace in Mobile-Payments Race – WSJ
