The degree of smartphone penetration in China and the success of Alipay have raised interest among foreign mobile wallet and payment providers. Yet, to succeed in China, they will need to be strategic and plan their entry very carefully.
With over 400 million registered users and growing, the success of Alipay has attracted lots of attention from outside China. In a market where smartphone users will surpass 900 million by the end of 2015, several mobile payment and wallet providers are vying for a piece of the market. Companies such as Apple are already on the ground trying to bring their solutions into China. Cellum, a mobile wallet provider based in Hungary, is taking an alternative approach by distributing a white-label mobile wallet service in China.
The size of the Chinese market is certainly attractive to many providers. However, the likes of Cellum and Apple will be greeted by a very turbulent headwind if they attempt to target a significant share of wallet in China. First of all, Alipay is already deeply rooted in China and owns an 80% share of the mobile wallet market. Secondly, Alipay is a brand that’s deeply ingrained among consumers in China. Finally, no other providers will be able to match the services that Alipay offers, such as the ability to ride the subway in 40 different cities across China with the Alipay app.
However, this is not to suggest that foreign mobile wallet providers should avoid China altogether. Rather, they should consider where the best opportunity in the market lies for a new brand. The less developed inland areas of China, where around 500 million consumers have yet to tap into Alipay, would be a good starting point.
– This article is reproduced with kind permission from Datamonitor Financial. Some minor changes have been made to reflect BankNXT style considerations. You can read the original article here.