Re-Imagining Innovation in a Digital Wallet – East versus West

By Manash Bhattacharjee
eCommerce Head of Product Management
PepsiCo

 

 

The first thing a U.S. visitor to China or India who is familiar with using PayPal or Apple Pay is likely to notice, once they start using a regional mobile wallet app, like Alipay or Paytm, is the sheer magnitude of the functionality these wallet apps provide. In China you can use the multi-purpose app WeChat to pay rent, top up your mobile, order a taxi, invest, split restaurant or bar tabs, buy a flight ticket, book movies and quite a few other things. Similarly, if you are using Paytm, you can use the wallet app to pay for your prepaid or postpaid plan, utility bills, local public transport, shop from the app, book travel, movies and even fund amusement parks trips!

In contrast, U.S. based digital wallets are primarily used for checkout – dominated by online and in-store. If you compare the two groups, it will seem like mobile wallets in the U.S. like PayPal Mobile App have only made half- hearted attempts at integrating various services beyond checkout and sending or receiving money.

The Big Numbers

 The other major differences, in my opinion, will probably come from numbers! PayPal has globally reported 200M active users and public estimates for Visa Checkout is 12 M active users.

Alipay(market share 68%), a separate subsidiary now from Alibaba, has estimated 450M active customers with 45 M daily transactions through their Alipay Wallet app. WeChat(market share 20%), part of Tencent holdings, has 1B users of their messaging service but has not  disclosed their active wallet users. But during previous year’s holidays in February, WeChat users exchanged more than 32 billion hongbao envelopes – virtual envelopes stuffed with electronic cash. These virtual envelopes are based off of the original, traditional red envelopes containing money and presented as gifts at social gatherings or holidays in China and other Asian societies. In comparison, the Indian market is dominated by Paytm (backed by Jack Ma/Alibaba) with 150M active users. Because of demonetization, digital wallets like Paytm are seeing unprecedented growth in India– leading to 7M transactions as a daily average. Along with Paytm, the other dominant wallets in Indian markets are Freecharge (owned by Snapdeal – India’s 3rd largest marketplace, after Flipkart and Amazon India) and MobiKwik. Mobile payment in India is expected to grow 90% YoY to reach 153B in transactions by 2021-22.

Quick Response Code as Acceptance Solution

Abbreviated QR code, this is a type of two-dimensional  bar code originally used in the auto industry in Japan, now very popular outside the industry as well. Sao Yi Sao is the ritual of scanning the QR code using your WeChat app to send a friend/follower/connect request. Nearly everything in WeChat has a QR code and the ubiquitous code is broadly used in India and China, for payment acceptance by micro merchants, for offers, for P2P etc. The U.S. based digital wallet has definitely seen very limited usage of QR code.

U.S. Digital Wallets Growth in Emerging Markets

For U.S. digital wallets to grow in emerging markets like Indonesia, Africa, Latin America, etc, the ability to leverage solutions like utility, transportation, travel, and micro merchants will be critical to increase consumer adoption and daily usage. We can see a glimpse of that in the way Chase Pay has been trying to build an ecosystem on its platform. This space is going to be extremely interesting and competitive, but I feel consumers will be the ultimate winners.

Manash is a product leader, mentor and speaker in the fintech environment. As eCommerce Head of Product at PepsiCo, Manash is focused on developing highly disruptive, rapidly evolving platforms, products and technologies, with the goal of bringing positive change to the world. 

Having lived and worked in New York, London, India, Singapore and Manila, Manash brings in a global perspective to all his projects. Manash has filed 30+ patents and loves to share his experiences through speaking engagements in digital product, design and innovation focused events.