Between Alipay, Wechat Pay and other insert-company-name-here-plus-Pay solutions, it seems like many cashless payment apps are copy-paste efforts. It’s not just the naming convention that gets copied, as the actual payments process is similar across the board. When it comes to point of sale payments, in particular, they all harness NFC technology, allowing you to use biometrics to tap and go. It’s not hard to see why the wireless communication chip has become the foundation for mobile payment apps. It’s a more intuitive payment process than swiping your card and entering your PIN.
NFC or bust
There’s nothing necessarily wrong with NFC at all, but if the major cashless solutions don’t offer more payment options, they simply risk losing emerging markets (and associated market share). Just look at China, Indonesia, Kenya, Ghana and a ton of other countries for proof. Many of the top payment solutions in each of these markets don’t use NFC chips at all. We’re starting to see NFC technology in ever cheaper smartphones —consumers can now get NFC enabled phones for less than $50. However one size doesn’t fit all and thanks to the rapid pace of technological evolution, we have more options for cashless payments than ever before.
QR codes rule the roost
Say what you will about QR codes, but they’ve seen widespread, global usage in the mobile payment industry. The result is an explosion in QR code-enabled payment apps such as AliPay and WeChat in China. More recently, WhatsApp has adopted QR codes as one payment option in India. Alipay and WeChat Pay, alone accounted for close to $15.4 trillion in transactions in 2017 essentially rendering cash obsolete in urbanised areas where they are widely accepted. The advantages are plain. You simply need a smartphone camera and a decent internet connection to conduct a payment. A QR code-based solution means even a $50 Android smartphone is capable of running mobile payment apps.
Sure, QR codes aren’t as seamless as NFC-based solutions, but they’re a relatively simple, cost-effective alternative for emerging markets and budget smartphone owners. Some QR-powered payment apps specifically support text message notifications — another important feature for emerging markets. In the absence of common high-speed internet, smartphones, and point of sale terminals, text messages serve as a key layer of assurance allowing cash-strapped informal business owners to accept QR code-based payments with a feature phone. Simply wait for the text alert (or check the customer’s payment screen) and that’s all the confirmation you need.
Mobile payments via USSD and text
USSD codes work as a further conduit for innovative mobile payments. East Africans and Kenyans were among the first to adopt phone-based payment solutions en masse, thanks to M-Pesa. Launched in 2007, the mobile money service lets people send and receive payments via their mobile accounts. The platform uses USSD dialling codes and text messages instead of an app or something similarly complex. It was borne out of necessity, as many in Africa don’t have bank accounts. Using a system that works with prepaid mobile accounts makes more sense, as loads of people have one or more SIM cards.
Where to next for cashless payments?
The trickle-down effect of smartphone features from premium to budget is certainly inevitable for most features. However, NFC tags are available at scale at relatively low cost for companies wishing to supply cashless options for their customers and merchants. Alipay and Wechat Pay will no doubt continue to gain a ton of users as they expand to other developed markets. If they really want to get a leg up, they should take a few notes from solutions in emerging markets.