Before I left for China in mid-September, on a three-city,
four-university whirlwind from Shanghai to Beijing to Hong Kong, I tried to
read up on the mobile payment market there. The numbers were staggering: the
New
York Times reported $5.4 trillion in transactions in 2016, 50 times the
mobile payment market in the US that year.
Now, if you’re reading this in China, of course, you can’t
access that story in the New York Times,
and this made the payments landscape in China even more fascinating to me. The
so-called Great Firewall blocks access to many of the sites we not only take
for granted in the United States but absolutely depend upon and would go into
withdrawal without: for me, that’s the Times
(we had a lovely reunion in the Beijing airport, by the way, once I’d passed
through immigration). But the firewall blocks Facebook and Google, too among others, and made communication back
home a challenge. One of my traveling companions brought several phones each
with a number of different paid VPN services just to ensure near-continuous
connectivity.
What’s striking however is the contrast between Internet restriction
and the absolute proliferation of communication, media, social networking and
payment within the platforms provided by the two mobile payment services currently
vying for dominance in China: WeChat and Alipay. WeChat is a product of
Tencent, the online gaming company that once upon a time got anthropologists of
money and our
interlocutors
in other fields excited because of its native digital currency, Q coins. (Q
coins also freaked out the Chinese monetary authorities. Again, see this
article in
The
New York Times). Its competitor
is Alipay, is a part of Alibaba, which started off as an e-commerce company and
has branched out in to finance and cloud computing. Although people told me
that Alipay controls about 60% of the mobile payment market in China, I mostly
saw people using WeChat Pay, and indeed the companies have basically reached
parity now. The logos for each are as ubiquitous at the point of sale in physical world stores, cafes and restaurants as
the MasterCard and Visa logos are in the US. One person who let me photograph
her payment behavior said that she usually just picks whichever is closer to
her when she approaches the till. Others however said that it was the suite of
services offered within WeChat, and that are integrated with payment, that lead
them to choose WeChat Pay over its competitor. And, indeed, to live a lot of
their online and offline life within the WeChat app. (Alipay similarly offers
such a suite of services).
So, what’s going on with mobile payment in China?
First,
here’s how you pay. Unlike mobile money services in sub-Saharan Africa that
rely on the mobile telecommunications networks and use or at least started out
using their native communications protocols which run through telco servers—SMS
(text messages), and USSD (I’ll tell you about it some other time…)—or mobile
payment apps in the US that use radio frequency ID or near field communication
(RFID/NFC) that allow for the “tap and pay” of, say, an ApplePay, WeChat and
Alipay use QR codes, the phone’s camera as a scanning device, and the phone’s
display screen as a generator of a unique QR and bar code payment token. WeChat
users have individual QR codes connected to their WeChat accounts. They can
scan them to share contact details, become connections on WeChat’s social media
platform, and also now for payment. The WeChat app also generates barcodes for
scanning by specialized point-of-sale devices (usually hand-held optical
scanners). I wasn’t able to observe as much about Alipay, but, again, this may
say something, despite Alipay’s current market share, about shifting dynamics
in this fast-moving sector in China. It might also just be a product of the
specific demographic of the people l hung out with (college educated, urban,
with disposable income, etc.), or regional variation (I was only in big
cities), or something else. WeChat aggressively burst onto the scene through
mobile social media, whereas Alipay began as a desktop platform, which may also
account for some of the differences in market share and use between the two
services.
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| QR code in temple |
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| QR code for bike sharing |
QR codes for payment are EVERYWHERE. In temples for donations. On bike-share
service bicycles (scan the QR code on the bike to unlock it and pay for it,
and away you go). On business cards.
On signs inside and outside shops. On waitresses, whom you can tip
electronically by scanning a QR code on an oversized button pinned to their
lapel. On homeless people, who print them out on paper and hold them or prop
them up next to their spot on the street. People use it for peer-to-peer
transactions for everything from paying for your kids’ school activities,
splitting a bill, or doing a little informal
forex.
(I couldn’t use it. I rented a Chinese iPhone that turned
out to have an operating system too old for the WeChat Pay app. Foreigners have
a hard time using it anyway, since you need a Chinese bank account, unless you
get people to send you money and keep the funds it in your WeChat Pay wallet).
 |
| QR code for business card |
 |
| QR codes for informal forex |
Ursula Dalinghaus pointed me to
this article on the
ubiquity of QR codes and their multiple uses in China today, and I saw just
about all of these uses in my travels. I also saw lots of examples of what I’ll
just call QR code art for now—clever ways to integrate design elements, brand
identification or personalization within a QR code. Nothing as fancy as
these, but you get
the idea.
Think back to 2008 and the rise of M-Pesa in Kenya. Back
then, what did people primarily use their phones for? Mainly texting, maybe
voice calls. So, it was an easy leap to develop a service that permitted
payment via text message. Now think about your own phone use. How many texts or
calls did you make today? How much use of your screen did you make for things
other than reading texts? How many pictures did you take, receive, send, view
online? If SMS had become the key functionality of the mobile phone for many
people in the early 2000s, arguably, today it’s the camera and the nice big
bright screen that we have come to depend on. QR codes simply leverage this
fact.
They do something else, of course, too. SMS data goes
through the telco and is owned by the telco (in the actual property sense but
also in the metaphorical and material sense of how the data is transited and
where it goes and sits for a while, in the telcos’ servers). Image data from
the camera scanning a QR code is encrypted by WeChat and is inaccessible to the
telco. If the user’s phone is connecting via WiFi, then the data is not even
touching the telco’s pipes at all. WeChat does not have end-to-end encryption,
however, in order to comply with
Chinese policies.
But the telco is essentially shut out of the WeChat and WeChat Pay user data
streams. The folk theory—and possibly the reality—is that WeChat Pay gets “all
the data” from transactions and from anything else that happens over WeChat,
and the telco gets nothing, so the telcos are mad about this (again, this is
what I heard). At the same time, however, everyone seems to think that the
Chinese government also gets to peek into all that data, and that WeChat must
be willing to share its data with the government in order to stay in business.
See, for example,
this kind of
story, about human rights activist Hu Jia.
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| "Cash only" till |
There are a couple of interesting things about how WeChat
Pay handles accounts, too. As noted above, you can link it to your Chinese bank
account, and it will then direct debit and deposit to that account. You can
also work entirely within your WeChat Pay wallet—letting WeChat store your
funds, which you can then use for all sorts of in-app purchases and for
online/offline payment interfaces like the Ofo bike sharing service. (I don’t
know what WeChat does with the float but I am told both companies invest the
money in the market. Alipay is technically a product of Ant Financial, a fintech
company that owns a bank and was spawned by Alibaba). There are different kinds
of accounts: personal accounts and merchant accounts. I was told—and I do not
know if this is true—that mom-and-pop merchants use their personal account to
receive payment because it is not taxed the same way as a business account. One
friend speculated that if the Chinese government or WeChat cracked down on
this, there would be a rush back to cash-only payments for these merchants. (I
only saw one “cash only” till in my
travels (pictured, in Shanghai) that is, until I got to Hong Kong, on which, read coming part
2 of this blog.
WeChat Pay’s origins in gaming show through clearly in the
interface and some of its applications. Users can send “red envelopes” to one
another, a fun way to send small amounts of money and to do so in a social way,
spreading the love through one’s network of friends and encouraging others to
pass it on. (Alipay, at least to me, shows its origins in e-commerce—it looks
and feels “all business” to me, like PayPal here).
WeChat also leverages its social networking side. WeChat was
primarily a social networking chat service allowing users to form groups. It
has a blogging service within it too (and in fact there’s a
WeChat blog that
talks about the future of money and payments and mentions my work!). At events
where people were meeting each other for the first time, everyone was talking
out their phones and exchanging their
Weixin
handles or using the “Shake” function of the app to connect, or else just
scanning each other’s QR codes.
WeChat also now has a full
suite of services (see screenshot to left) within it such that the user never has to leave the app
to do everything from pay bills, rent a bike, shop, connect with friends, read
news stories, use lightweight programs, book hotels or train travel, find
people willing to offer services for pay (a handyman, a tutor), and on and on.
People did express concerns over data privacy: “my whole life is on WeChat.”
But at the same time accepted, if sometimes with resignation, that that’s a
small price to pay for convenience. Said one user, “it’s just so convenient,
and my life is an open book.” Or another, “I know they’re watching but I don’t
care and it’s just so easy.” The “they” here is understood to be both WeChat
and the government. Still, as long as you do not discuss “politics or religion”
I was told, you won’t be brought under suspicion.
Speaking of monitoring: another set of terms of everyone’s
lips when I was in China had to do with machine learning. A surprising number
of people in different contexts wanted to talk about deep learning, machine
learning, natural language processing. Knowledge about the Chinese government’s
widespread data tracking had sparked great interest in these techniques at the
ground level, too.
As I said, I couldn’t download the app on my old rental
iPhone. And, incidentally, I couldn’t easily get cash either. It was almost
like being in Sweden, where it’s also notoriously difficult to get cash. I tried
a bunch of ATMs; the only one that would work for me was at an HSBC office. Fortunately,
I was on my way to Hong Kong, which turned out to be something of a cash
capital.
