Will UnionPay challenge the duopoly of Alipay, WeChat Pay on mobile payments in 2018?

Photo: Sam Tsang

The duopoly of Alibaba's Alipay and Tencent's WeChat Pay in China's booming mobile payment market might well be undermined by a new online payment service backed by the government.

On the occasion of the Spring Festival, UnionPay, China's biggest state-endorsed bank card network operator, launched an aggressive marketing campaign for its Mobile QuickPass, allowing users to obtain red envelopes of up to 2,018 yuan if they use the mobile payment app to complete money transfer or recommend it to their acquaintances.

The Spring Festival promotion is considered as its biggest marketing stunt since its debut in late 2017, resembling WeChat Pay, which had offered favorable policies in the form of red envelopes, discounts and subsidies.

Mobile QuickPass is a mobile payment app, which was jointly launched by UnionPay and more than 30 commercial banks and payment institutions in December last year. By integrating mobile payment functions and benefits provided by various institutions, Mobile QuickPass has become the unified app of the country's banking industry.

Mobile QuickPass is hailed by UnionPay as an almighty mobile payment tool. By linking bank cards to the app, users are able to manage their bank accounts and enjoy the mobile payment services and benefits provided by commercial banks. The app also offers a variety of services including UnionPay's quick response code-based payment, signing up for various mobile payment solutions, comprehensive credit card services, interbank real-time money transfer and payment services for various amenities including railways, air flights, convenience stores, supermarkets, universities and other public service utilities.

What's more, Mobile QuickPass features a comprehensive and real-time security control system powered by technologies including chip security, geographical location, artificial intelligence and big data analysis.

UnionPay is expanding the global footprint of its quick response code-based payment service by creating more usage channels of Mobile QuickPass at home and abroad in an attempt to challenge the dominance of Alipay and WeChat Pay, the two leading third-party mobile payment services in China enabling customers to complete payments through scanning quick response code.

Meanwhile, UnionPay holds an overwhelming advantage in operating the contactless payment service equipped with near-field communication (NFC), a wireless technology which transmits data from a special chip-equipped mobile phone to a bank through NFC-based point-of-sale (POS) terminals. It is worth mentioning that Mobile QuickPass also provides the NFC-based payment service, which means that the large base of POS machines owned by UnionPay at stores and malls would definitely help increase the acceptance scope of Mobile QuickPass.

When it comes to business success in China, a support from the government is indispensable. On this point, Mobile QuickPass, which is developed under the guidance of the People's Bank of China (PBOC), the country's central bank, gets a strong government endorsement, which could be reflected in the attendance of the senior officials from the central bank and other big state-owned commercial banks at the app's release ceremony last year.

At the ceremony, Fan Yifei, deputy governor of the PBOC, described the launch of Mobile QuickPass, which adopts unified portal standards in user identification and user experience, as a "significant measure in enhancing financial innovation and promoting seamless retail payment for customers". Fan also hopes that all the involved parties would use the app as a starting point to provide comprehensive, multi-faceted, convenient and efficient mobile payment service to meet the growing needs of users.

According to the latest statistics released in early February, transactions through UnionPay's network including the point-of-sale machines and mobile payment grew by 28.8 percent year-on-year to 93.9 trillion yuan in 2017, largely helped by the launch of Mobile QuickPass. And UnionPay's role in upgrading the payment industry in the countries covered by the China-led Belt and Road Initiative would bring a golden opportunity for the rapid growth of the company's mobile payment service globally. That is a privilege that Alipay and WeChat Pay could not enjoy.

A Xinhua News Agency report said that UnionPay cards are the most popular bank cards in Laos, Mongolia and Myanmar and are used by a growing number of foreigners spending in China. And in Europe and the United States, the issuance of UnionPay bank cards saw 20 percent growth last year, according to the report.

The growth momentum of UnionPay's mobile payment has prompted China's third-party mobile payment service providers to work hard in enlarging their mobile payment apps' scope for bigger share, with Alibaba this year announcing to further apply Alipay in the public transportation systems of more Chinese cities.

At the same time, foreign mobile payment service providers doing business in China are also trying to catch up. Apple, which holds just a tiny part of the country's mobile payment market, recently offered temporary discounts for taxi riders to encourage them to use Apple Pay to pay their taxi fares.

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