The Power of Chinese Mobile Payment Platforms

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If a foreigner went to China, they would be surprised by how difficult it is to pay for anything with cash with most restaurants no longer accepting paper bills and even beggars having moved on from physical money. This is because of the dominance of mobile payments platforms such as Alipay owned by Ant Financial and WeChat Pay run by Tencent, two of the largest tech companies in China. These two apps monopolize a jaw dropping 89 percent of the payment market with the vast majority of financial transactions being conducted digitally. This includes everything from paying at a restaurant, a convenience store, or even gifting money to a relative during the holidays. The question is no longer about who will dominate future financial transactions in China but rather what these companies will do with it.

Due to the emergence of machine learning and its ability to create highly accurate predictive models with enough information, data collections has become the lifeblood of tech companies. With data on consumer habits and business patterns, they are able to predict likely outcomes using data trained algorithms. Nowhere is such data more potent than in China where Ant Financial and Tencent have access to a lens into the entire Chinese economy. With this trove of data and their technical expertise, they have the ability to more accurately predict what a consumer will want to buy next not only based on past purchases but also potentially based on their financial situation. They can even provide targeted loans to small businesses with the perfect interest rate, calibrated by the business’ past performance with consumers if Chinese financial regulations loosen. The possibilities are nearly endless, the only question is what will they pursue next.