Why is It Difficult to Promote Contactless Payments in China?

A lot of Chinese people thought the most convenient payment method could be Alipay or WeChat Pay etc. which are based on the technology of QR code. When someone needs to pay, just show the QR code or scan receiver’s QR code. People bind their bank cards on Alipay, WeChat Pay etc. and then do not bring their wallets anymore. The contactless payment, which is dominated by Apple Pay in the UK, is not popular as the payment methods mentioned above. Although the contactless payment seems more convenient than QR code payment, people even do not need to unlock their cellphones, to promote contactless payment in China is still very difficult. It is very common in the very rural places or for small vendors to have QR receiving codes, but seldom to see they have POS machines. From my experience, it might have two main reasons for this.

Costs

Money is always the essential factor for all business activities. QR code is not an advanced technology, but precisely because of this, the cost is very low, people can get a QR code with very little money. Think about this, a street snack vendor just can earn 1000 GBP per month, why they invest over 1200 GBP to get a POS machine? To print a receiving QR code just need 10 pence, and it can be used for over many years. In addition, money can be trading within the WeChat Pay or Alipay system, they do not need to withdraw from them. So, the users, whatever payers or payees, do not need to pay the commission fee as their cost. I heard many complains from the Chinese business owners in the UK that the POS machine issuers charge too much commission fee, they would rather to receive money from WeChat transfer and give discount to customers.

Habits and Mindset

The interest thing is, if searching ‘card holder’ on Taobao, most of the merchants introducing their products with ‘preventing fraud’. Because there once was some news to say that a theft got a POS machine on the public transport to stole money with contactless technology. This message makes most of Chinese people worrying about the contactless payment. The same situation in ETC system in China’s highway grid, many people, including my parents, always remove their card on the ETC payment machine when they leave the cars, because they are worried that someone will make a machine similar to the ETC collection device to defraud the money in the bank cards on the vehicles. So, compared with contactless payments, QR code at least need to verify the identity, the process is quite like people take paper money from pockets by hand and give it to the sellers.

Based on that, if the businesspersons want to win the payment method market, they not only need to calculate the cost, but also need to know the users’ mindset and their culture, then can beat their business competition.