What Apple Pay can learn from WeChat and Alipay

The trick is to reach ubiquity without becoming a Galapagos.

“There is an audacious economic phenomenon happening in China,” writes Paul Mozur, back from a reporting trip to the mainland, in Monday’s New York Times.

Almost everyone in major Chinese cities is using a smartphone to pay for just about everything. At restaurants, a waiter will ask if you want to use WeChat or Alipay — the two smartphone payment options — before bringing up cash as a third, remote possibility.

Just as startling is how quickly the transition has happened. Only three years ago there would be no question at all, because everyone was still using cash.

“From a tech standpoint, this is probably one of the single most important innovations that has happened first in China, and at the moment it’s only in China,” said Richard Lim, managing director of venture capital firm GSR Ventures.

Apple Pay, introduced in China more than a year ago, is going nowhere fast. The Chinese are hooked on QR codes, which work on all phones—Android, iOS or flip—and don’t require expensive NFC (near-field communications) technology.

But as Mozur points out, there’s a risk for WeChat and Alipay as they try to expand beyond the Great Wall. Call it the Galapagos effect:

In Japan in the early 2000s, flip phones could do everything from stream cable TV to pay at stores. But because the phones were so advanced, Japan was slow to adopt smartphones, and it went from tech giant to tech laggard in 15 years.

Now in Japan those flip phones, which are still being used, are called Galapagos phones because they evolved perfectly for an isolated environment.

Apple has the largest share of U.S. contactless payment market (about 36%), but that’s not saying much. Compared with the Chinese, most Americans are in the currency dark ages, still fishing out change from the bottom of a purse while the rest of the world taps its feet.

UPDATE: This just crossed from the South China Morning Post: Apple unveils promotional campaign to win Chinese consumers to Apple Pay

2 Comments

  1. Sandro Castellaro said:

    May very well be a Galapagos effect….but at 1.37 billion people it,s one heck of a large Galapagos

    3
    July 17, 2017

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