Mobile pay halt: mixed reviews
Updated: 2014-03-18 11:01
By Michael Barris in New York (China Daily USA)
A move by China's central bank to halt mobile phone payment systems and virtual credit cards over security concerns disappoints convenience-cra-ving consumers as online and mobile payment transactions grow rapidly.
"People who go for convenience just want to get it (a transaction) done as soon as possible," said Monica Wu, a Toronto resident visiting Manhattan for her 31st birthday. A big fan of Taobao Marketplace, an eBay and Amazon.com-like online shopping website in the Chinese language, Wu said she used the Alibaba Group Holding-operated site "all the time" until she settled in Toronto after graduating from Brock University in Southern Ontario's Niagara Region.
On the other hand, the halting of payments made by scanning a bar code with mobile devices probably won't mean much to consumers who don't feel comfortable with online payment systems, Wu said. "Those people may just go to the traditional channels - like a store," she said.
As the investment specialist for the Royal Bank of Canada spoke, thousands of revelers, shoppers and tourists streamed through Times Square - many of them dressed in green in celebration of St Patrick's Day. The throng also included hundreds of US university students on spring break. College-age students from China tend to be big users of online shopping and payment services such as Taobao.
One of them, Wu Yue, a university student also visiting New York from Toronto, said halting the mobile payment process is only as important as the size of the transaction one makes with it.
"If I am only buying things under $100, then I don't mind," the 23-year-old statistics student at the University of Guelph (Ontario) said. Her school friend and traveling companion, Zisang Yang, also 23, said payment security is an important issue as mobile payments gain wider acceptance in China.
"I get the point that mobile payment is not secure, but if the system allows you to go through Alipay (Alibaba Group Holding Ltd's online-payment affiliate) - then you are passing the risk to Alipay, and I don't mind using the mobile," Zisang said.
The order by China's central bank hits Internet companies Tencent Holdings Ltd and Alibaba which had rolled out new virtual credit cards as competition heats up in China's e-commerce sector. The cards can use QR bar codes scanned by smartphones to process payments, in partnership with China CITIC Bank Corp. The People's Bank of China (PBOC) said its decision targeted worries about the security of verification procedures.
With China widely expected to overtake the US as the world's largest online retail economy this year, the halt of any new services is likely to be temporary, while the PBOC moves to assess how customer information is being secured, according to analysts.
Michael Clendenin, managing director of Shanghai-based RedTech Advisors, viewed the halting of mobile payments as "probably a temporary thing until the government figures out what is going on".
China's mobile payment market last year surged more than 700 percent to 1.22 trillion yuan ($199 billion) in transactions, according to statistics released by the central bank. Mobile led all categories of e-payment methods recorded by the central bank, including online payments made via computer, as well as telephone payments.
In October 2013, Alibaba said Alipay recorded about 25,000 mobile transactions per minute, for daily transaction value of more than $3.3 billion. In February, Alipay said it handled 900 billion yuan in mobile payment transactions from more than 100 users last year, completing more mobile payments than US-based PayPal and Square Inc combined.
On China's busiest online shopping day - Nov 11 - 21 percent of orders on Alibaba were placed through mobile devices - up from 5 percent a year earlier. As 2013 ended, China had 618 million Internet users and 500 million mobile Internet users, according to data provided by China Internet Network Information Center.
(China Daily USA 03/18/2014 page1)