Alibaba, Tencent’s Success Coming With The Mobile Payments Market
What do you make of a technology that’s so prevalent, everyone from captains of industry to the homeless is putting it to work? That’s the case for mobile payments, particularly in China, where a massive rising tide is giving two firms in China major-league status: Tencent and Alibaba, the folks behind WeChat Pay and Alipay respectively.
In the period between 2015 and 2016, the mobile payments market fully quadrupled in China, while increasing just 40 percent in the United States. Those numbers are impressively different, but it only gets more pronounced when looking at the differences in straight numbers; 2016 in America saw $112 billion in mobile payments take place, while in China, the total mobile payments market cleared a hefty $9 trillion.
This meant not only profit outright for the major mobile payments processors—Tencent and Alibaba—but it also meant a massive slug of consumer data, which was a secondary profit vector that allows for expanded marketing efforts, improved service rollouts, and generally all those things that help make other businesses more profitable.
Of course, it also helps that Tencent and Alibaba have the stranglehold on a market that’s over a billion people strong, and thanks to government mandates, pretty much have that market all to themselves with a very few minor exceptions. Setting up shop in China is no mean feat, and requires more than a little help from local businesses at last report.
With a walled garden to play in that has more than enough people to make three United States, it’s no surprise these places are doing well. Based on the Chinese government’s response, these places are almost doing too well, and it looks like there will be some rein-pulling in the coming months thanks to new requirements about how much of customers’ payments the mobile payments firms have to keep back. Not that the companies will be overly hurt; they’ll still have the percentage of payment processing and the customer data on hand.
Still, for now, Tencent and Alibaba are doing wonders, and will continue to do so for some time. The nature of the market makes such a course all but inevitable.