CITY TECH ROB WALKER

WeChat Pay Shapes Street Life in

FIRST RELEASED JUST SIX YEARS AGO, THE CHINESE abundant online information attached to the SOCIAL-MEDIA APP WECHAT IS ONE OF THE MOST offline world.” For sellers, there’s no need for POPULAR IN THE WORLD, WITH A REPORTED 938 anything as complicated or expensive as the MILLION ACTIVE MONTHLY USERS. It caught on as a special devices a vendor typically needs to messaging service, and has kept adding features. accept credit-card payments (or, for that matter, One has become wildly popular in ways that have ); anybody can print a QR code. attracted widespread attention: payments. Visit That’s one reason WeChat Pay caught on any Chinese city today and you’ll quickly discover not just with larger established businesses, that the option to pay for practically anything by but also everything from small restaurants to using a smartphone is pretty much inescapable. street vendors. “It’s impossible not to use,” says The upshot is that WeChat Pay has emerged Kate Austermiller, program manager for the as a powerful example of a digital-payments China program of the PKU–Lincoln Center in ecosystem taking hold through a unique intertwin- Beijing. Skeptical at first, she now relies on ing of mobile technology and the built environ- WeChat Pay even for minor transactions like ment. Along with a rival service called buying water or a piece of fruit from a vendor. (offered by e-commerce giant Alibaba), it’s at the “It’s almost faster than fishing through my purse center of a digital phenomenon shaped in part by for cash—my phone is always in a pocket,” she the city context—and one that may, in turn, affect says. Even buskers use it to accept “tips” via a elements of that urban context in the future. QR code, as easily as they might collect coins The general notion of digital payment is tossed into a hat. nothing new. PayPal has been around for years; your credit card details are likely on file at a slew of online retailers; a solid and growing base of WeChat Pay has emerged as a powerful users rely on to make person-to-person example of a digital-payments ecosystem payments; Apple Pay has forged deals to enable smartphone payments at a number of major taking hold through a unique intertwining of retailers in the United States and beyond. And so mobile technology and the built environment. on. But while 2016 mobile payments in the United States totaled US$112 billion (RMB 742.7 billion), the figure in China was a reported US$5.5 trillion The Better Than Cash Alliance—a United (RMB 36.47 trillion). Beyond the numbers, the Nations–based organization focused on financial sheer ubiquity of WeChat Pay and Alipay has inclusion, with business, government, and other made the smartphone-as-virtual-wallet idea collaborating members—recently published an more overtly visible, something woven into the extensive case study focused on the rise of fabric of city life. digital payments in China, and what that trend Accepting payment via WeChat requires a could mean globally. “Digital payments are very vendor to do little more than print out a unique closely linked to financial inclusion,” observes QR code—essentially a more advanced form of Camilo Tellez, the head of research and innova- bar code—and link it to a digital account; to tion at the alliance. In China, Africa, and else- make a payment, a customer can scan that code where, he explains, systems with a smartphone. Pony Ma, the CEO of WeChat have given millions of people their first direct parent , has called the QR code “a label of link to the formal financial system.

OCTOBER 2017 29 out, and a kind of alternative universe of connect- products and services that made the company a ed innovation has evolved. And in the case global powerhouse. Its Alipay app was early to of these payment services, at least, Chinese target brick-and-mortar merchants with an regulators have so far allowed a fair amount of offline, QR code–based payment system. But it is latitude for experimentation. (Current government widely acknowledged that when WeChat creator planning around financial development through Tencent put its payment feature on the map with 2020 includes the specific encouragement of a major marketing push a couple of years ago, it extending financial services to micro-businesses was a game-changer. and low-income groups.) Cleverly, the campaign played off a tradition To accept WeChat Pay, And in China, digital payments arrived as an of making monetary New Year’s gifts of cash in vendors like this Beijing option in a fairly cash-based society—certainly red envelopes. WeChat offered a digital Red grocer print a unique compared to the deeply entrenched credit and Packets promotion, and an estimated 5 million QR code and link it to a debit card culture of the United States. (Some users participated—learning in an instant to digital account; customers simply scan that code with observers suggest that a Chinese aversion to associate the social network with payments. For a smartphone to pay. debt makes digital payments preferable to the Tencent, the payment feature isn’t necessarily Credit: Tao Jin plastic alternative Americans in particular are so conceived of as a profit center, but as another fond of.) The leapfrog from cash to digital seems attraction keeping WeChat users locked in to a to be happening elsewhere in the developing service that profits from games and advertising. world, with the rapid rise of mobile as a driving The company has subsidized third-party While 2016 mobile payments in the U.S. totaled US$112 billion (RMB 742.7 billion), factor. This has been amplified by population developers to help more businesses adopt the figure in China was a reported US$5.5 trillion (RMB 36.47 trillion). Beyond the shifts toward urban centers, where job opportu- WePay, and peer-to-peer transactions are free. numbers, the sheer ubiquity of WeChat Pay and Alipay has made the smartphone-as- nities concentrate, that make the ability to stay The more WeChat Pay took off, the more connected with family or other contacts across Alipay countered with its own competitive moves. virtual-wallet idea more overtly visible, something woven into the fabric of city life. physical distances more important. Both systems are now widely available in WeChat isn’t the only digital payment player, China—and compete with various “cashless or even the first, in China. ’s society” promotions involving discounts or “In China it’s become really obvious that convenience,” says Zhi Liu, director of both e-commerce platform dates back to the late rebates—and the companies are each diving into SMEs—small- and medium-sized enterprises— the China program at the Lincoln Institute of 1990s, and evolved from a business-to-business markets elsewhere, sometimes in partnership can really reap the benefits,” Tellez says. Land Policy and the Peking University–Lincoln marketplace into a variety of digital-payment with local players. “Leveraging digital payment systems can Institute Center for Urban Development and As digital payments have become a routine actually allow them to access new forms of Land Policy in Beijing. A vending machine in accepts WeChat Pay. part of city life, they’re already subtly shaping it. credit” unavailable to a pure-cash operation, he In fact, Liu confesses that while he’s not the Credit: Nagarjun Kandukuru/Flickr Tellez, of the Better Than Cash Alliance, points to continues, and that can have a major impact on type to jump onto the latest tech trend, this one the effect on utility cost-recovery and toll managing or even growing a business. A payment made itself irresistible, even offline. He’d start collection, particularly in developing-world system folded directly into a social network has looking around for an ATM to get the cash to, say, contexts; and, for even small businesses, the other advantages; the Better Than Cash Alliance split a bill, and his colleagues “would just use a ability to collect and leverage useful transaction report tells the story, for instance, of a hair stylist mobile phone and say ‘It’s done!,’” Liu laughs. data. And as Liu points out, the broader potential who used WeChat both to expand his customer Pretty soon, you just get on board with everyone of higher-level data collection is tantalizing. base, and to avoid carrying too much cash when else. And thus the flip side: any given urban Clearly there are privacy-related concerns about traveling among appointments. business quickly figures out that if every rival on how such data is shared and utilized. But in an Because WeChat made it easy for all sorts of the block accepts this payment form, it’s time to academic or planning context, it may offer a online vendors to use its platform (and even do the same. window on day-to-day economic behavior that subsidized third-party developers to help them), Some country-specific factors have likely can give us a whole new way to, as Liu puts it, users can now do anything from book a flight to contributed to the digital-payment explosion in “understand the city.” pay utilities to reimburse a friend for a shared China. Its Internet ecosystem is distinct in part meal, without ever leaving the app. “People because familiar entities like Google and responded to it rapidly—it really provided a lot of , among others, are essentially locked Rob Walker (robwalker.net) is a columnist for the Sunday Business section of .

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