Aims to take on established players such as Alibaba, Tencent
Bank card association China UnionPay on Monday announced standards for Quick Response (QR) code payment services, a move that will cause a stir in the nation's mobile payment sector, which is dominated by Internet giants Alibaba Group Holding and Tencent Holdings.
Industrial and Commercial Bank of China and China Minsheng Bank, members of UnionPay, have been conducting trials of QR code payment services based on UnionPay standards, a spokesman for UnionPay told the Global Times on Monday.
The date that UnionPay chose to announce the standards has also revealed the company's ambitions in the mobile payment sector.
Like the Singles' Day shopping festival on November 11, December 12, also known as the Double 12, is now another major shopping carnival and more importantly, a new battlefield for Internet giants to promote their mobile payment services.
For instance, Alibaba launched a promotion campaign covering 1 million stores in more than 400 cities from Saturday to Monday. Consumers can get discounts or coupons by making payments via the company's Alipay payment tool. Tencent launched a similar campaign that gives consumers gift money if they use its WeChat payment system.
Responding to massive promotion campaigns, Chinese consumers, especially those in big cities, have formed the habit of using mobile payment methods like QR code payment.
In the second quarter of this year, total transactions by third-party mobile payment tools exceeded 7.5 trillion yuan ($1.08 trillion), according to data from Internet consultancy Analysys International.
The user base of mobile payments is also growing and "is nearly equal to that of mobile Internet," Liu Dingding, a Beijing-based independent industry analyst, told the Global Times on Sunday.
A survey from consultancy Deloitte released on December 5 showed that 78 percent of the respondents said they had used mobile payment options at least once.
UnionPay cannot afford to lose out in this fast-growing market. In December 2015, UnionPay, together with more than 20 commercial banks, launched the Quick Pass mobile payment tool. It is based on near-field communication (NFC) technology, which enables consumers to make payments by tapping their smartphones against payment terminals. Apple Inc's Apple Pay and Samsung Pay are based on similar technologies.
But mobile payment based on NFC technology isn't as popular as QR code payments in China, as the latter is more convenient. "Most of our customers use WeChat or Alipay, and very few of them use Apple Pay or Samsung Pay," a cashier at a Carrefour store in Beijing's Chaoyang district said on Sunday.
UnionPay will face strong rivals in the QR code payment segment, as consumers are already used to the QR code payment services of Alibaba and Tencent, with Alibaba's Alipay having a 55.4 percent share in China and Tencent 32.1 percent of the mobile payment sector in the second quarter, according to data from Analysys International.
Dong Zheng, editor-in-chief at credit card information portal 51credit.com, told the Global Times on Monday that although no major security flaws had emerged from existing QR code payment services provided by companies such as Alibaba and Tencent, the UnionPay standard is technically safer.
UnionPay also launched a promotion campaign for its Quick Pass mobile payment tool recently. For instance, consumers at 7-11 convenience stores can get a deduction of as much as 10 yuan from their purchases. But the company "has to make more inputs into promotion if it wants a foothold in the QR code payment sector," Dong noted.