A Retrospect of Mobile Payment in China

Fumble your mobile phone in your pocket or bag, scan the QR code, and take your goods or service, this is the most common buying procedure you will see in today’s supermarket, shopping mall, restaurant, and even vegetable market. However, the history for mobile payment is not long, when we look back to 5 years ago, it was very rare to see a pay-by-phone transaction.
Compared with 10 years ago, the definition of mobile payment has largely changed. At the very beginning, mobile payment emerged in South Korea and Japan which was based on chips or infrared technology.
From 2005-06, NFC made rapid development, and China Union Pay had set up a research team for NFC and worked out a solution for mobile payment on the basis of financial IC card chip. Device producers, chip manufacturers, scheme designers, bankers, and business owners were all poised to capture a share of the market. However, as defects lay in infrastructure and management as well as disparate technological standards, the NFC failed to be popularized until the widespread usage of financial IC cards and the upgrade to contactless pay for POS terminals.
From 2011 to 2012, Alipay had been working on a pay solution by scanning a QR code with mobile phone. The taxi app, which features small amount but high frequency transactions, had become a perfect match for Alipay. Later on WeChat QR code marched into the market, and this marked the commencement of the ‘war’ for market shares.
Because of the stimulus of subsidies, Alipay and WeChat Pay are the two leaders for the industry, and competitors like NFC and flash pay of Union Pay are catching up in full speed. The escalated competition speeds up the development of the mobile payment industry and make it outpace its overseas counterparts.