Exploring Mobile Payment Success: China's Innovation Advantage

This essay examines the factors contributing to the greater success of mobile payments in China compared to Western countries. It highlights the role of trust-building initiatives like Alipay's escrow system, the widespread adoption of smartphones, and the innovative use of platforms like WeChat. The essay contrasts China's rapid embrace of mobile payments with the slower adoption rates in countries like the USA and Japan, attributing China's success to its large underbanked population, a less mature regulatory environment fostering innovation, and the dominance of e-commerce giants like Alibaba. It concludes that China is leading the way towards a cashless society due to its accessible mobile payment technologies and widespread consumer adoption. Desklib provides this assignment solution and many other resources for students.

Running Head: Innovation 0
Innovation
1/5/2019

Innovation 1
Introduction
The mobile payments are more successful in China as compared to the West as people of
China easily and quickly adapt to the innovation as compared to Western countries (Mozur,
2017). China claims the country’s largest mobile payment market, serve as the benchmark for
the other markets, and attain success and growth. In the following review, an effort has been
made to discuss why mobile payments are more successful in China than in the West.
Mobile payment is more successful in China than in the West
The mobile payment is more successful in China as the building of trust is the main factor of
success in China. The Alipay has resolved the issue as customers paid money, which was to
be transferred to an escrow account as this makes the customers more comfortable. The
strongest digital players also promote them as Alipay belongs to Alibaba Group, which has
the main payment method on Tmall and Taobao. China is the first mobile society, which
greatly contributes to the development of mobile payments. According to Statistics, it has
been stated that in China there are more than 626 million smartphone users. China is far
ahead to Western countries i.e. U.S.A where mobile payment is not well-equipped and should
be motivated by the vast number of customers who have seemed credit cards and cash
payments more convenient and easy. Another aspect that has driven the popularity of mobile
payment is the initiation of the red packet by WeChat in 2014, as more and more people
utilize in special events and occasions and has made an interesting trend in China (Pearson,
2015).
China was also trying to maintain local payment services in countries that have big
underbanked and unbanked populations. The Companies of China as Alibaba came up with
the trend of innovation i.e. Alipay, which has gained immense popularity, builds a strong
payment platform, and the customers adapted it very quickly. It is stated that only 6% of
Japanese people and 5.6% of Americans make use of mobile payment system through mobile
phones, whereas 98.3% of Chinese people use mobile payment. The mobile payment in
China has empowered customers also in rural areas, which has changed from cash to
smartphone and advancing the utilization of cheques and credit cards. Mobile payment
carries sheer convenience to the customers of China and by utilizing smartphone they can
make payments for most of their activities in their daily routine and maintains a vicious circle
(Zhong and Nieminen, 2015).

Innovation 2
Innovation Points
 The Alibaba Group Holdings is an e-commerce giant of China, which owns payment
platform i.e. WeChat embraces a market share of 93% in the population of 2.3 billion
people. It is likely that the mobile payment system will go smoothly in China as
compared to Japan.
 The innovation of customer services has gone quickly as China’s regulatory situation
is less mature than in the west and there is more scope for new competitors to
innovate.
 They have owned Taobao and Tmall, which operated for more than 80% of e-
commerce transactions.
 The organizations are overtime developing a scale to become players in radical
innovation (Chen, 2016).
Conclusion
The mobile payments are more successful in China as compared to Western countries as
Japan and America. They have been adopted by a majority of customers of China, which can
accept a cashless life. There are technologies which have made mobile payment more
accessible to consumers. China pulls ahead of West and closest to the cashless industry with
more popularity of mobile payment.

Innovation 3
References
Chen, L. (2016) From fintech to finlife: The case of fintech development in China. China
Economic Journal, 9(3), pp.225-239.
Mozur, P. (2017) In Urban China, cash is rapidly becoming obsolete. The New York Times,
45(7), pp.336-439.
Pearson, A. (2015) China’s social and mobile companies set to shake the tech world. Journal
of Digital & Social Media Marketing, 3(2), pp.135-150.
Zhong, J. and Nieminen, M. (2015) Resource-based co-innovation through platform
ecosystem: experiences of mobile payment innovation in China. Journal of Strategy and
Management, 8(3), pp.283-298.