China Face-Off America – Battle of Global Payments between Tech Titans



Earlier this year Daily Fintech did a China week, and there were several interesting topics and key insights discussed. We analysed how the three Chinese Tech giants (Baidu, Alibaba and Tencent) have led the Fintech boom in China and what the favourable factors that helped were. However, over the past few weeks, we have had some developments with WeChat expanding into Europe, and almost as a reaction (perhaps not), Facebook ramping up group payments on messenger, Android pay collaborating with Paypal and more. We have Ant Financial’s bid for Moneygram and there is also a rumour that Whatsapp was ramping up to launch payments in India. That feels like a heated battle between Tech giants of the east and the west (really Chinese vs Americans, such a cliche) for Global Payments Glory. 

While we immerse ourselves in Fin and tech in the west, we often tend to forget that there is a whole new world out there in Asia that completely dwarfs what we have achieved in the west with regards to Fintech. FinTech financing in Asia-Pacific was almost US$10 billion in the first half of 2016, eclipsing the aggregate of North America’s (US$4.6b billion) and Europe’s (US$1.85 billion). WeChat sent 32 billion digital red envelopes over Chinese New Year in 2016 and 46 Billion in 2017. Paypal did 4.9 billion transactions in the whole of 2015 and 6.1 billion in 2016. This list could go on, but you get the point. The dragon really dwarfs the west!!

China Fintech

Stats aside, Chinese tech giants have had tremendous success in their local Fintech market. In comparison, Apple, Facebook, Google and Amazon (the Fantastic Four) have had mixed results in the west.

I am fascinated by what Alipay(from Alibaba) and Wechat (from Tencent) have managed to achieve in China. A good story about the growth of these firms is how WeChat created a highly localised product to compete with Alipay. WeChat had been lagging Alipay upto the launch of “Lucky Money” during the Chinese New Year of 2014. It combined the Chinese tradition of “Red Pocket” with conventional peer-to-peer transaction, and achieved huge success by adding a fun flavor of luck into its payment function. During the New Year holiday of 2014, approximately 10 million users engaged and bundled their bank cards, and 40 million red pockets were dispatched. In 2016 these numbers on WeChat further increased to 420 million, and reached a massive 8 billion that same year. Jack Ma called this strategy by WeChat the “Pearl Harbour Attack” on Alipay.




Now, lets take a look at what the Fantastic Four have achieved in Payments.

Facebook, apart from hiring David Marcus (from Paypal) haven’t really had much joy with its payments business. Its payments revenue (for 2016) of $753 Million is tiny when compared to ads revenue of about $28 Billion. And the payments revenues were down 11% from 2015.

Google’s Wallet project didn’t go anywhere at all, however it had a much better uptake with its Android Pay. By end of 2017, Android pay is projected to have about 27 Million users. Android Pay have just agreed to integrate Paypal to it, which would mean customers can use Paypal through Android Pay.

Amazon’s “Pay by Amazon” has been a good story from the time it was launched. It has now 33 Million users which is almost a 50% annual growth from 23 Million users last year. Amazon managed to get its Wallet License in India last week (watch this space).

Apple pay has been the leader of the pack in the payments world. With about 84 Million users projected by end of 2017, Apple have so far done well in this space, however still lags behind Paypal.

All these numbers from the Fantastic Four are tiny when compared to the numbers achieved by WeChat and AliPay.

Alibaba have been quite active in expanding through acquisitions. Investment into PayTM in India, provides them a hold into PayTM’s 200 Million user base in India. However the most recent news on Moneygram is an ambitious step into the remittance market, and if the deal did happen (post all the drama), it would provide Alibaba a 5% share of the 600 Billion pound remittance market.

'The Americans aren't objecting in principal to a merger down the line as long as we build a Chinese wall to keep a couple of things secret from the Chinese.'

WeChat have more recently started global expansion into South Africa, set up its European offices in Italy and planning a London launch soon. While they are behind Alipay with their global expansion, their customer acquisition strategy has worked better (than Alipay’s) so far.

When I talk to innovators in India, I often tell them to create a simple solution to an existing problem without overengineering it. That’s generally true for most developing nations. There are ample problems to solve and a half decent solution can see massive growth if executed well.  In the case of China a few hundred million users went from Cash to Mobile Payments and it was a classic leapfrog moment. Most likely Alipay and WeChat wouldn’t see this again in their Global expansion adventures.

I believe they would have better success through acquisitions, investments and partnerships with key payment players in their target markets, rather than trying to lift and shift their business model in China elsewhere. I also think that the winner of the East vs West payments war would be decided by key battlegrounds in India, LATAM and Africa. If Alipay and WeChat could expand into these regions quickly, then the Fantastic Four would struggle to gain ground. However, you don’t write off the likes of Apple, Amazon, Google and Facebook that easily. Watch this space!!

Arunkumar Krishnakumar is a Fintech thought-leader and an investor. 

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The big Apple to square off against online payment giants


Recently H&M opened its doors here in Australia. Devoid as we have been for some time down under of fast fashion, the past few years have seen a flood of global retailers open on our high streets, including Zara, Gap, Uniqlo and Forever 21 to name a few.

In my university days overseas, H&M was a regular haunt. The clothes were (and remain) almost embarrassingly cheap (provenance anyone?) and the on-trend designs were always a draw.

So on a Thursday night last week, at a loose end while I waited to meet some friends for dinner, I was lured in once more by the ‘SALE!’ signs in the glossy white H&M windows, deciding I would kill some time ‘just browsing’ until I was due at the restaurant.

Of course, it wasn’t long before I was sucked in by the lure of the many bargains on offer. After jostling my way through the frenzy of shoppers, I decided upon three items I was willing to purchase on the off chance they fit, not brave enough to tackle the queue for the fitting rooms, and willing to gamble $50 on my purchase.

Feeling a little guilty for ending up parting with cash when I had only intended on looking, I made the trek to the checkout, rationalising each purchase in my head as to how it would ‘fit in’ with my existing wardrobe. Budget out the window, I was ready to part with my hard earned $50.

As I rounded the corner I was met with a rather unappealing site – a checkout queue that snaked around several posts. Not even H&M’s contactless payment devices were making significant headway with these shoppers.

Now while I might still occasionally shop at H&M, one thing that certainly has changed in my 10 years out of university is my patience for queues. Whether they’re at bars, shops or restaurants – queues are a deal breaker. I mentally weighed up the pain of standing in line verses how badly I wanted the garments. I checked my watch – almost time for dinner. I covertly hung the clothes on the rack next to me and made for the exit.

I’m certain my wallet breathed a sigh of relief as I exited, however there was a twinge of annoyance and regret about my abandoned purchase. Sure, I can go back to H&M at any time, but it’s unlikely I’ll ever find those items again. The whole experience certainly made me wonder, why, in 2015, when you really want to buy something, does it still have to be so hard?

In store payments broken

Even high end retailers struggle to get this right. Earlier in the year a friend was visiting Sydney from New Zealand and had specifically wanted to purchase an item from Louis Vuitton. Unfortunately for her, the visit coincided with Chinese New Year, a period which invokes Black Friday like shopping volumes and swathes of Chinese locals and tourists hitting up their favourite luxury goods retailers. Upon entering the store, which was swarming with people, we were told the wait to be assisted simply to purchase something would be up to an hour. An hour!? We’d entered planning to purchase and we couldn’t even buy. It was a mildly ridiculous experience.

What should this look like then? As a shopper, I think many of us are well placed to describe the experience we do want when we decide to get off our laptops and head into the store. Seamless. We want to enjoy the process of shopping, rather than have it feel like a chore, with obstacles thrown across our path that make it harder, not easier, to buy. Shopping shouldn’t feel like a steeplechase. It should feel like a gentle stroll through a botanical garden, with plenty of time to stop and smell the gardenias.

Apple Pay launches online payments

So it was with interest that I followed the announcement this week from Apple about its eponymous Apple Pay being available at online checkouts this fall. If anyone is going to make a customer payment experience beautiful, surely it’s going to be Apple.

And well, that’s pretty much what they announced – one click shopping that’s safe and easy. Soon retailers across the globe will be sporting Apple Pay buttons for lucky Safari browser users. Instead of entering in card details and exposing your personal details to the servers of every retailer you shop at, you’ll be able to do it once, with Apple. Verification of your payment will be made via Touch ID on your phone or a few taps on the side of your Apple Watch. Brian Roemmele, Apple evangelist and founder of Pay Finders has a great run down on how it will all work (beautifully of course) in this article on Medium.

PayPal will certainly be taking notice of Apple’s long anticipated move, not to mention the likes of Google and Samsung. PayPal already has its own one click checkout feature, One TouchTM  which it no doubt hopes to use as a form of defence against the big Apple. PayPal is reported to already be seeing staggering improvements with One TouchTM, with conversion rates north of 80%.

From online to offline

But back to my somewhat disappointing H&M experience – what about in store payments? Can Apple make those beautiful too? Can a retailer’s point of sale system just start talking to my Apple wallet for the purposes of paying? It is exciting to imagine the Apple announcement as opening the doors (perhaps just by a crack) to a future whereby checking out becomes synonymous with walking out. A future that says when I walk into a shop, I am automatically pre-authorised to spend up to a certain amount, can pick up some items off the rack and then simply walk out, my credit card debited automatically in the process.

It sounds dangerously intoxicating, but really it’s just translating what online payments are becoming, into the offline environment.

Point of Sale Clover sort of tackled this back in 2014 by integrating Apple Pay in-app payments with its cloud based point of sale, trialing the payment process in a local beer and burger joint. Punters who downloaded the venue’s app were able to order from their table and pay via Apple Pay, in-app. Confirmation of the sale was then tracked back into the Clover POS, just like it would be for a standard card present transaction.

But really, the magic is unlocking in store mobile payments in a way that doesn’t require you or I to download yet another app. Just like we’ve come to expect a credit card machine to accept all the cards in our wallet, it might not be that farfetched to expect all the point of sale systems in the stores we shop in to one day accept all the wallets on our phones – be they Apple Pay, PayPal or some other incarnation. And for us to not have to bother with queuing up to get our phone or our watch near a credit card reader in order to finalise our payment.

While retailers spend so long getting the lighting, store design and product looking perfect, it sometimes feels like they forget to take creative steps to optimise the one thing that really matters – conversion rates. Experience is more than just a nice waft of perfume when you enter the store, it extends all the way to how easy it is to buy the actual goods. Apple Pay and PayPal are making it easier to do this online. Time will only tell if they’ll rise to the challenge offline as well.

Daily Fintech Advisers provides strategic consulting to organizations with business and investment interests in Fintech. Jessica Ellerm is a thought leader specializing in Small Business.

Can fintech impact small business loyalty programs?


Data, data everywhere but not an insight in sight.

For a small business owner, life must feel a little like this, as more and more cloud based tools deliver yet more and more data, all patiently waiting to be crunched, analyzed and pored over late at night.

For the small business owner, joining together disparate data points is one of the hurdles that must be overcome in order to get a true picture of the business financials. Bank feeds into cloud accounting is creating greater clarity on this, connecting what were once separate worlds. There are a number of interesting reporting tools that are probably worthy of a separate post.

But what about the financial data linked to customer purchasing behavior – connecting the dots between how customers pay, what they buy and ultimately why they spend? For physical retail environments – where the bulk of payments are still conducted – this is still difficult, relying for the most part on clunky plastic loyalty cards, not to mention staff remembering to ask for them.

Apple Pay has solved this relatively elegantly for large retailers, integrating big name loyalty programs with its Wallet app last November. Apple can now link person (Apple ID) to card type (did I use my Amex or my Visa?) to purchase (shampoo, coffee, t-shirt).

Shift down the market to small business, and you have US  companies FiveStars and Bellycard layering marketing analytics onto spend data. In Australia, Rewardle does the same.  All deliver ‘small data’ and actionable insights to business owners.  For example, ‘today it’s hot and coffee sales will drop – send a push notification to your loyalty holders inviting them for a discounted iced tea’. It’s all about real-time insights to drive purchasing behavior, rather than heavyweight reports and data feeds.

The rise of mobile wallets linked to loyalty programs also starts to provide interesting opportunities for loyalty members who want to ‘shop around’ their points. Fancy a coffee at Starbucks? Trade some of your Walgreens points for a tall vanilla latte with another loyalty cardholder. Moving city and want to sell your points to your neighbour? Sell them in the app and turn your loyalty into cash.

What ultimately differentiates mobile wallet platforms, like Apple Pay, from the large portion of the loyalty market, is that most platforms are still locked out of linking a card number to an individual. For Apple, it would appear it is possible for the company to aggregate purchasing behavior for an individual across multiple bricks and mortar stores. In theory, it would also be possible for Apple to measure loyalty penetration across cardholders. It’s hard to think of anyone else at a physical store level that can crunch that sort of data today, besides possibly banks. Building the online and offline picture of a customers shopping habits will soon, for omni-channel small business owners, become just as important as it is to large retailers as well.

Loyalty has always been a fragmented space – no provider seems to have really cracked it. But who knows, maybe more fintech startups will find smart and elegant ways to connect the dots for businesses in the near future.

Daily Fintech Advisers provides strategic consulting to organizations with business and investment interests in Fintech. Jessica Ellerm is a thought leader specializing in Small Business.

Apple Ambitions in Fintech

This is one of a series that looks at the big dog ambitions in Fintech. I started with Google and then I looked at Alibaba.


Apple Pay is game-changing for a very specific reason. It is not disruptive. Apple Pay plays nice, nice with the existing payments giants. Nor does it use any amazing new technology.


Apple Pay is game-changing because it will change user behavior. The combination of three things will ensure that waving your phone at a check-out will feel pretty normal:


  1. Apple gets the user experience right
  2. Apple is a trusted brand
  3. Apple has the clout to get partners on board


This is what Apple did with iTunes. Napster blew up the music business model with free and illegal. iTunes reaped the reward with cheap, easy and legal. Bitcoin is blowing up the payments business model with free and outside the system (sometimes legal, sometimes not) and Apple Pay may reap the reward with cheap, easy and legal.


Apple Pay is ideal for physical stores. That leverages the fact that you “don’t leave home without your phone” (remember that Amex ad). Apple Pay does not really add any value in e-commerce, which is where Bitcoin is gaining more traction.


Next up (tomorrow) is Facebook’s Ambitions in Fintech.

To disrupt the Credit Card business with Bitcoin, innovate on Credit

The Card part has gone digital; it has disappeared into our mobile phone. The plastic will soon seem as antiquated as (insert name of your favorite long dead technology). To young people and to the 70% of the world that is unbanked today, the plastic part of a credit “card” will be nothing more than something you read about in history books.

Once money is digital, transfers can be instant and free. Welcome, Bitcoin.

That leaves the Credit part.

Consumers don’t care about those 2.9% Credit Card fees. That is a Merchant problem. Even Merchants can get reduced fees easily by using Debit Cards rather than Credit Cards. This has been an area of regulatory tussle, but the simple reality is there is no logic in charging 2.9% for the ability to connect to a bank account and withdraw money.

The Apple payment changes the game for small transactions, basically replacing the few notes that you give the barista with a wave of your phone. It works because it is small transactions only. So small scale cash transactions (whether that cash is paper/coins or digital) is problem solved.

That leaves larger transactions where cash is not attractive to the consumer. You want to pay for it over time. Maybe that time is 30 days or maybe it is longer. Now that Peer to Peer Lending is going to prime time (signaled by the Lending Club IPO), there is no reason why lending could not be applied to transactions at the point of sale. It is only a question of some big data and a decent API, the kind of tech problem that is relatively easily solved.

When will Google make their big Bitcoin move?

The biggest clash of the titans in TechLand is Apple vs Android.

Apple has made their payment move. Apple Pay is smart and plays nicely with the current payment gorillas – Visa, MasterCard and Amex.

Google now needs to make their payment play. It cannot be me-too and follow Apple. It will probably have a disruptive and open source angle, because that is how the Google guys like to think and how they differentiate Android from Apple.

So they will probably do something with Bitcoin. The questions remain – when and what?