by Markus Eichinger
July 10, 2017

The history of payment is strongly linked to the history of civilization. It’s still evolving and now we’ve entered the phase of mobile payment. China takes the lead – e.g. with its payment solution WeChat Pay which is outstanding in many ways.

When thinking about the history of payment, we’ve come a long way. We already talked about it more in detail here, with a nice infographic included, so here let’s just briefly talk about the most important steps so far:

After trade by barter came commodity money, then coin and paper money, as we still use it today. The next step was immaterial money (e.g. e-money or digital money) which further simplified business a great deal, especially when we think of international trade, and has made modern forms of trade like e-commerce at all possible.

Following the history, it is easy to conclude our money has become more and more “dematerialized”.

China and WeChat Pay - the dematerialization of money

Dematerialization of money: What does it mean for payment?

Book money can easily be transferred from one account to another – just by altering entries in a database, as long as the sender and receiver can securely be identified. And exactly this identification is what drives today’s payment ecosystem: Payment becomes a matter of identification.

Whereas much could be written about this alone, let’s just focus on the fact here that modern smartphones are the preferred device to enable secure (biometric) identification. And that’s exactly the reason why we see such an increase in new forms of payment especially in the last several months and years.


The next step: new methods of payment have emerged

Whereas until some years ago, the evolution of payment money was quite linear, now for some time the payment scene has become very much multicolored, diverse and complex – there are so many new players.

It is surely difficult to keep an overview – so let’s see how we can structure them into three categories:

WeChat Pay - new methods of payment

 

Another step ahead: China – and WeChat Pay

In terms of payment, looking at China means looking into the future. Why China? Well, the “Middle Kingdom” is clearly in the worldwide lead when it comes to mobile payment.

Just take a look on this map – theses figures show the total worldwide mobile payment transactions in millions of Euros in the month of May 2017:

WeChat Pay: China is leading in terms of mobile payment

Source: Statista

There are some Chinese peculiarities which help to understand why China is a very special and progressive market:

The Chinese live the “mobile first” philosophy – which not only means that programs are designed for mobiles before designing them for the desktop computers.
But it also means that many people like to use their mobile phone for as many tasks as possible, e.g. chatting, online shopping, in-store payments, ordering and paying taxis, reading the news, paying their electricity bills and much, much more. And if you are a user of WeChat, you can do all of this with just one app!

Product designer Jessie Chan is an expert on WeChat and in her blog article that’s worth reading she shows WeChat’s stunning range of functions:

WeChat's range of functions is stunning - it offers users an "all-in-one" solution (Source: "Everything you ever wanted to know about WeChat" by Jessie Chen, published on uxdesign.cc).

WeChat’s range of functions is stunning – it offers users an “all-in-one” solution (picture source: “Everything you ever wanted to know about WeChat” by Jessie Chen, published on uxdesign.cc).

By far, not everybody in China owns a computer, but nearly everybody has a smartphone, so this is why we can talk about a “mobile only” way of thinking and acting. In comparison to Western civilizations, things we are used to, like desktop computers or credit cards, were simply “skipped” by many Chinese – they directly went to smartphones.

In addition, we must keep in mind that traditional banking in China is strongly regulated by the government. This is why there are antiquated structures – e.g. you can’t just use easy and secure online banking in the same way as in Europe or in the US. It is also not that easy and convenient to apply for a payment card that works internationally – one more thing that players like WeChat or Alipay take advantage of.

The customer interaction information merchants can gain from payment data is priceless #SmartData #AI

 

Mobile Payment at the POS via WeChat Pay

While we’ve already talked about Alipay several times on this blog, let’s now take a closer look at the extremely popular app WeChat – and how people like to use it best.

As you can see below, sending or receiving money or paying mobile is top 4 and 5 on the list – even though WeChat has introduced mobile payment at the POS – e.g. at shops, restaurants, bars – just a few months ago:

Payment with WeChat is one of the most popular functions

Here are some examples of the multitude of payment features that can be used with WeChat Pay (graphics taken from the above-mentioned article):

WeChat Pay - wallet, credit card, balanceWeChat Pay: saving, mortgage, credit card, financial products

 

Why the insights that payment data allows are priceless

No matter if WeChat Pay or other progressive solutions, they deserve a lot of credit because they transform mere payment at the POS into a customer interaction channel.

Payment data can reveal very much about customers, their behavior, needs and preferences:

WeChat Pay: payment dataAll this data can be extremely helpful for merchants, in order to tailor their offerings exactly to the client’s needs. Here you see some examples how:

WeChat Pay: payment data analysisTo go more into detail would go far beyond the scope of this blog article, but I strongly suggest you to have a look at the articles that appeared on the blog about Smart Data taking retail to the next level and my article about why and how artificial intelligence is shaping the future of retail.

One thing is certain: We’ll be hearing a lot in the near future from intelligent, comprehensive and user-friendly payment solutions like WeChat Pay which by establishing customer interaction channels allow merchants to make a big step forward by understanding their customers’ needs much better than ever before.

 

tl;dr? Summary: From barter to customer interaction channel

  • In history, money has become more and more dematerialized, enabling at all modern forms of trade
  • Smartphones are a perfect device to enable identification, which drives today’s payment ecosystem
  • China is a very special and progressive market and is in the worldwide leader in terms of mobile payment; nowhere else is the philosophy “mobile first” as valid and as visible as here
  • The app WeChat Pay is outstanding in many ways and shows the impressive scope of performance of a highly modern and innovative payment solution
  • Payment data allows priceless insights about customers’ needs, preferences and behavior

 

Would you like to know even more about how China is changing the internet as we know it?

Then we recommend you this great film about WeChat made by New York Times.