is home to the world’s most influential consumer-tech firms, but China’s online corporate titans are way ahead in the race to build mobile-payment services in many of the world’s fastest-growing consumer markets.
China’s digital-payments market, by far the world’s largest, is dominated by e-commerce
Group Holding Ltd. and social-media champ Tencent
Holdings Ltd. Now the two are imparting money and know-how to mobile-money startups
in other Asian markets, from Indonesia to India.
As people across Asia increasingly move from cash to smartphone apps for buying goods and transferring money between individuals, U.S. firms are “still very focused on their home market,” trying to increase usage there, said Shiv Putcha, an analyst at research firm IDC in Mumbai.
In China, QR codes
are used widely by smartphone owners to pay bills and make purchases in shops and at vending machines—contributing to a $9 trillion mobile-payment market last year, according to iResearch.
That is almost 90 times the size of the U.S. mobile-payment market of $112 billion, according to data from research firm Forrester.
Two payment platforms—Alibaba-backed Alipay and Tencent’s Tenpay—handle some 90% of China’s online payments by transaction value, iResearch
says. As China’s market matures, Alibaba
are chasing growth overseas, helping local startups
in emerging markets run mobile-money systems that don’t require plastic.
Chinese investors supplied the bulk of $2.7 billion in funding to Asian financial-technology startups
in the second quarter of 2017, according to research firm CB Insights. Their experience in China and technical savvy may prove even more valuable.
As in China, merchants in many emerging markets lack point-of-sale machines needed to process payments via Apple Inc.’s Apple Pay and Alphabet Inc.’s Android Pay. Meanwhile, few consumers in these markets have credit or debit cards to make payments.
Executives at India’s largest mobile-payment app, Paytm, drew inspiration from Alibaba, one of its main funders. Paytm’s chief financial officer, Madhur Deora, said his company benefits from frequent meetings with senior Alibaba
staff travel to Alibaba’s offices in China and vice versa.
“We exchange thoughts on design and product,” Mr. Deora said, referring to the way apps appear graphically on smartphone screens and how services can increase user engagement. It is invaluable, he said, to have a backer who knows that if a new feature takes off, “you could have 100 million people using it.”
Mr. Deora and his colleagues had noted that Alibaba
was offering users of its app access to online money-market funds, so the Indian firm decided to riff on that product. “Our takeaway was that it had to be an instrument people could relate to,” Mr. Deora said.
The result is a savings product that Paytm’s more than 225 million users in India can use to purchase portions of gold bars through the platform—an idea designed to appeal to consumers accustomed to storing wealth in the precious metal.
When India’s government last year suddenly canceled 86% of currency in circulation to clamp down on corruption and tax evasion, Paytm
swooped in. It bombarded India’s merchants—the vast majority of which don’t accept credit cards because they lack swiping machines—with stickers bearing the Paytm
logo and QR codes.
The service’s user numbers skyrocketed.
is used in India to pay for items from roadside hawkers, rides from auto rickshaws and more. Sellers don’t need special gadgets beyond the QR code, which transfers money from a buyer’s mobile account into the vendor’s.
added to its heft in May, raising $1.4 billion from Japan’s SoftBank
on Monday launched its own mobile-payment smartphone app in India, which people can use to transfer money to individuals and businesses without the use of a credit or debit card. Meanwhile, Alibaba
and its affiliate Ant Financial have invested in Thailand in a financial-services company called Ascend Money.
China’s digital-payment kings have another incentive to reach out: Chinese international tourists, a fast-growing consumer group. Alibaba
want to build links in their mobile-payment platforms to ensure their core services are available to Chinese consumers wherever they travel.
Ant Financial has partnered with Indonesian media conglomerate Emtek to launch a digital-payments service in that country, and with a financial-technology firm in the Philippines. Alibaba
has been helping startups
learn to use new cloud technologies to handle transactions efficiently in their home market, according to a person familiar with the matter. Engineers for Emtek traveled to Alibaba’s headquarters in Hangzhou for training in cloud technologies, the person said.
processes a “huge amount of payment transactions in peak moments” and that kind of experience is hard to acquire, the person added. An Emtek spokesman declined to comment.
last year led a $175 million round of fundraising in Indian messaging app Hike Ltd.
In June, Hike brought a payments feature to its platform, beating larger competitors.
Hike founder Kavin Bharti Mittal
has said the app draws upon Tencent’s experience running China’s biggest social network, WeChat, which is popular for its messaging, mobile payments and entertainment features. A Tencent
spokeswoman didn’t respond to requests for comment.
“China is a few years ahead of us” and working with Alibaba
is “sort of our university, said Amit Sinha, chief operating officer of Paytm’s e-commerce
Source: The Wall Street Journal