China’s Mobile Payment Transaction Volume Hit $41.51 Trillion in 2018
China has seen an explosive growth in mobile payments over the past five years. Transaction volume reached 277.4 trillion yuan ($41.51 trillion) in 2018, up more than 28 times from five years ago, according to the People’s Bank of China (PBOC).
The total number of transactions made via mobile payment platforms surged to 60.53 billion last year, up from 1.67 billion back in 2013.
We get this question a lot, and its a valid question. Today we will explore three ways that free makes money.
Facebook has been in the news lately because they sell data to make money. It has always been understood that Facebook makes money from ads and data, but most people were unaware how much data Facebook was actually collecting and sharing - and with whom.
Facebook’s model is not a new concept, giving free content in exchange for watching a few ads has been around since the early days of newspaper, radio and television. Facebook just appropriated a successful model and started tracking a whole lot more; and that’s where things started to get dicey.
We aren’t picking on Facebook specifically (it’s probably worthy of a blog post unto itself), but suffice to say they didn’t invent the wheel and they served to prove that companies can take the TV and radio model and apply it to online assets and be extremely profitable. Eyeballs for ads is real, very profitable and the easiest way for free to make money.
Another option to monetize free is to deploy a freemium model. Freemium involves giving away something of value for free in hopes that some of your users will find value in upgrading to a paid version. Conversation rates can range from 4%-10% on average, but recently Spotify enjoyed a 27% conversation rate. There are lots of successful freemium model examples, but usually these models are augmented with paid ads to further monetize free.
Another option is to sell data. This option does not have to involve selling personal data like Facebook did or even data that identifies users. It could simply mean selling aggregate data to people who have a vested interest in knowing aggregate habits. For example, a hedge fund wants to know trends ahead of the market, so it would be valuable to them to know that Coke is selling better than Pepsi in specific markets.
While there are other options, many of them border on being dishonest, so we will stick with these three for the moment. Either way, any option you choose, you should look at how your decision will: 1) impact your users; 2) impact your reputation; 3) impact your company legally; 4) impact your ability to sustain growth and profitability 5) impact your team and stakeholders. Whatever route you decide, above all be honest and transparent to all of your stakeholders.
If you know of other ways that meet our requirement of being honest and transparent, please reach out to us!
Just reviewing some numbers - and maybe they just impress us, but they should alarm U.S. Banks and the credit card companies! Here are a few that standout:
Mobile payments in China (WeChat Pay & Alipay):
2015: $1 Trillion USD
2017 $17 Trillion USD
2018 $41.51 Trillion USD
All credit card payments for the rest of the world combined in 2017: $25.1 Trillion USD
Mobile Payments in the U.S.:
2015: $8.71 Billion USD
2017 $120 Billion USD
Chinese giants WeChat Pay and AlipPay didn’t start offering mobile payments solutions until 2014. In just four years they managed to process more payments than the entire credit card industry and the US GDP combined.
31.6% of the world has a Facebook account and Facebook is prohibited in China, the world’s largest population (1.386 billion people)
Facebook gained 2.36 billion users in 14 years, whereby it took JP Morgan Chase nearly 150 years and several mergers and acquisitions to amass 80 million customers.
Alipay amassed the largest money market fund in less than 3 years.
Visa averages 1,700 transactions a second (peak volume is 9,000) while Alipay alone in 2015 did 87,000 transactions per second (peak volume is 256,000)
Let that data digest for a minute…
For many this data beckons an obvious question, why the heck is the world’s largest economy (U.S.) sleeping at the wheel? We believe it comes down to one word: Legacy. Legacy behavior, legacy thinking, legacy regulation, legacy rules and legacy networks.
If this data doesn’t excite you, you are probably not a fintech payment geek, but that’s OK, let us know what you think anyway: https://twitter.com/movehoney