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Mobile Payments are Making “Double 11” China’s Cyber Monday on Steroids


Spire Research


Without exaggeration, it is China’s Cyber Monday on steroids with over 10 billion (USD) in sales within 24 hours in 2014. Since 2009, Double 11 or Singles’ Day (November 11), has exponentially expanded into an enormous ecommerce shopping carnival in China with deep discounts offered by major e-commerce giants such as Alibaba Group and JD.com.
 
It’s all thanks to the prosperity of the world’s largest e-commerce market, where digital payment technology is rapidly maturing and becoming widely accepted by Chinese consumers. And the giant Internet third-party payment platforms that are leading the way include Alipay (Alibaba), Tenpay (Tencent), UnionPay and 99Bill. Alipay, for example, saw a huge growth in transaction value for this year’s Double 11 as they exceeded 57 billion RMB (~nine billion USD) from only 50 million RMB (~eight million USD) in 2009.
 
However, these payment platforms are not satisfied with only being limited to e-commerce payments. As their tentacles have already reached deeply into many other payment solutions: E-wallet, electronic funds transfer, repayments (credit card and loan), multiple payments (Dutch treat, water, electricity, gas, TV bills, tuition fees, traffic tickets, lottery tickets, property management and hospital registration fees), rechargeable cards (mobile phone credit, university campus cards, fuel cards and game accounts), small amount financial management, insurance services, red packets delivery, charity and donations. Future services under development will continue to seek to match both customers’ needs and expectations of a sleek, simple form of payment.

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Innovative and Emerging Mobile Solutions
One example of an innovative approach to mobile payments is that of Dutch Treat Payments. Due to the special dining culture in China (sharing all dishes on a table and paying only one complete bill), it’s not always convenient to split the bill and pay separately. This problem has been solved by a simple new function of Alipays AA Payment. The process is very simple. First the person who pays the bill starts an Alipay group. Then after everyone joins the group, they input the total amount and click “collect payment”. The App will automatically calculate the amount to be collected from each payer and send them a notification. As soon as each payer clicks “agree” the funds transferred immediately.
 
Tencent--Alibaba’s main rival--has rolled out its own similar payment platforms with Tenpay. And recently they have stepped up the competition by adding mobile wallet features to its wildly popular WeChat mobile messaging app. Different from Alipay, as long as customers have Wechat account, they can enjoy almost all similar functions as Alipay by simply connecting a bank card to WeChat Wallet. With more than 500 million active WeChat users in mainland China and 100 million overseas, Tencent is looking to seriously push up its market share in the mobile payment industry.
 
Another innovative payment solution has come in the area of paying for a taxi. In early 2014, a few cab-ordering mobile apps became instant hits. Passengers could use these apps to order cabs and pay the bill through bundled mobile payment tools. To incentivize quick adoption between January and August 2014, both passengers and cab drivers received considerable subsidies (up to 15 RMB for each bill) from Tencent and Alibaba, as a major stimulus from these Apps to drive instant popularity.  
 
New Trend-O2O Model (Online to Offline)
In an attempt to expand mobile payments into the brick and mortar stores mobile payment platforms have put forth a major initiative to build out Double 12 (December 12) as a deep discount day for mobile payments in physical retail outlets. In 2014 they brought Double 12 into more than 20,000 stores from over 100 retail chain including FamilyMart and MerryMart. For consumers who paid through mobile devices on this day they received discounts of up to 50 percent (with a total discount cap at 50 RMB for each account). The offline shopping carnival commenced as thousands of post-60 and post-70 Chinese nationals who have never shopped online were queuing in supermarkets with their iPhones in hand for payment.
 
In short payment platforms in China are seeing a large amount of growth through shopping frenzies such as Double 11 and Double 12, which are in the long run turning into a habit of digital payments-both online and at the store.
 
Authored by the following researchers from Spire Research: Kathy Chen, Leon Perera, and James Wilcox

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