Can Mobile Wallets cross borders & offer personalized CX?
The plague of a message-based settlement system
The mindshare from the WEF22 events in Davos is still strong, both in the media and for me. The future of payments and money was a topic discussed around the Promenade as CBDCs, stablecoins, cryptocurrencies can`t be ignored anymore. They jumpstart discussions that bring to the surface not only the limitations of the existing systems but also, the complex, evolving, and fierce competing forces of existing players.
During a panel at GBBC that I attended last Tuesday, the CEO of Mastercard Michael Miebach, made a bold statement that SWIFT won’t exist in 5yrs (covered extensively by the media). The moderator`s closing question to all the panelists `Will SWIFT exist in 5yrs` received an overwhelmingly positive response from, the CEO of the new Swiss Digital Asset exchange SDX, the senior BIS economist, and the two Crypto CEOs from the Digital Dollar project and Digital Assets.
Which combinations of using technological innovations will reduce the use of the SWIFT message-based system or will become the tech stacks to overcome SWIFT limitations, is yet to be seen. Correspondent banking for cross-border transactions remains the top area revealing SWIFT`s weaknesses.
Innovation out of frustration continues to be a leading force. We already have several options and we probably agree that for at least the next 3–5yrs, we will be operating in a hybrid world. A world that includes:
- CBDCs that are struggling to complete the last mile and gain adoption
- Private Stablecoins with or without a regulatory advantage
- Settlement tokens like XRP and JPM coin
- Instant payment systems like SEPAinstant
- Mobile Wallets
- QR codes
- Contactless payments
Currently, the card networks are the dominant payment choice globally for in-store transactions. They mask the SWIFT inefficiencies for merchants and for end-users, especially for any cross-border transaction. According to Worldplay Payment report 2022, in 2021, credit & debit cards had a combined share of 47% for in-store transactions and 34% for e-commerce. Mobile wallets have been growing in both realms (online & offline) and as of 2021, they have a 49% share in e-commerce (by far ahead of cards) and 29% in the offline world. Even cash had a double-digit share of 18% in 2021 for in-store transactions.
China and Southeast Asia on the other hand, already favor mobile wallets and QR codes. According to Worldplay Payment report 2022, in the APAC zone, mobile wallet adoption was 69% for e-commerce, while credit and debit cards were used 13% and 8%, respectively (2021 data).
Cards and Cash still have a solid positioning, especially for international travel and cross-border transactions. The reality is that most mobile wallets are local and don’t work abroad. End consumers use cards abroad even though the FX charges are frequently sizable. In the West, Wise and Revolut built their businesses around such cross-border frictions with top-up cards and favorable bundles for FX rates.
A Saas Fintech innovation
Last month, I attended a seminar (with other thought leaders) about the Alipay+ solution which was launched in 2020 and is now branching out globally. This Payment-as-a-Service offering is both for merchants (offline and online) and for Wallet providers.
Alipay+ should not be confused with the Alipay wallet which already exists internationally but is mainly used by Chinese when abroad or for online shopping internationally at e-commerce sites that offer the Alipay wallet as a payment option.
Alipay+ provides next-generation cross-border mobile payment and marketing solutions and opens a gateway into an ecosystem.
There are two main aspects to the Alipay+ innovations:
𝐅𝐨𝐫 𝐌𝐞𝐫𝐜𝐡𝐚𝐧𝐭𝐬 — 𝐓𝐚𝐩𝐩𝐢𝐧𝐠 𝐢𝐧𝐭𝐨 𝐚𝐧 𝐞𝐜𝐨𝐬𝐲𝐬𝐭𝐞𝐦 𝐨𝐟 𝐝𝐢𝐠𝐢𝐭𝐚𝐥 𝐩𝐚𝐲𝐦𝐞𝐧𝐭𝐬
A merchant that adopts the Alipay+ solution is efficiently (operationally and cost-wise) able to accept payments from ALL mobile wallets and other digital payment apps that already participate in the Alipay+ ecosystem. For example, a merchant in the Philippines that of course offers the local Gcash wallet to accept payments will be able to accept payments from Alipay (China), AlipayHK, Korea’s Kakao Pay, Malaysia’s Touch ‘n Go eWallet, Thailand’s TrueMoney that are already in the Alipay+ family. The end consumers can use any of these partner wallets they choose and the merchant receives payments in the Philippine peso in real-time. Merchants not only get access to an entire growing ecosystem of mobile wallets but also to a variety of FX capabilities that Alipay+ has integrated with a one-time integration of this Saas offering.
Alipay+ is one great example of what Capgemini calls Payments 4.X
`With a focus on personalized CX, the dawning of Payments 4.X era is being enabled by data, shared infrastructures, robust platforms, and embedded finance.`
excerpt from the World Payments Report 2022
For Contextual payments & building relationships before and after the transactions
According to Ant Group, the capabilities of the Alipay+ payments and marketing solution aim to help merchants, especially small and medium businesses to grow their international outreach by efficiently serving cross-border offline or online needs.
To augment these capabilities, Alipay+ provides built-in digital marketing capabilities which leverage the 30yr-old QR code technology. This enables merchants to offer through their own app (be it a restaurant, a hotel, an entertainment business, an e-commerce site) real-time vouchers, rewards, and personalized offers directly to consumers. Burger King for example, is launching mini-programs with offers via Alipay+ in their Asia Pacific operations. Klarna in Europe is a big European brand name that has recently joined the Alipay+ family and I bet that the primary reason is Alipay+`s digital marketing capabilities.
The QR code buy-in here in the West, started during the pandemic when restaurants shared menus through QR codes. Now end customers want to be able to pay at the restaurant through the QR code. Merchants realize that QR codes engage with the end consumer before and after the payment transaction because it bundles contextual information: Menus, maps to your destination, opening hours, offers, etc.
Earlier this month I shared on Linkedin a report by Juniper Research looking into QRcode driven payments which is dominant in many Asian markets and is spreading now to the West as a contextual payment experience that can bundle other information and services.
Alipay+ is a gateway into an ecosystem of mobile payment platforms with built-in digital marketing tools to gain share in the Payment 4.X space.
In addition, Apple`s App store, Google`s Play store, the e-commerce platform SheIn and the online travel agency Agoda, are online partners of Alipay+. This adds a strong trust element regarding the security standards of the Alipay+ solution.
For now, the adoption of Alipay+`s technology beyond the APAC region is at a very early stage. Unfortunately, we live in a world where tech has racial and political aspects, in addition to standard business cultural barriers. On the other hand, the tough macro-economic conditions globally will push businesses to focus on the bottom line and find more ways to use smart tech and potentially grab a higher market share (even though the entire pie of commerce is shrinking as we speak).
 “CBDCs for Cross-Border Payments: It’s Time to Seize the Opportunity” recordings will be available in a few weeks. https://gbbcouncil.org/event/gbbcs-blockchain-central-davos/
📍Recommended read by McKinsey : Mobile Wallets, Southeast Asia`s new Digital life hack https://www.mckinsey.com/industries/financial-services/our-insights/mobile-wallets-southeast-asias-new-digital-life-hack
📌 Twitter: https://twitter.com/efipm
📌 Subscribe to my YouTube Channel with my insights and industry leader interviews. New video every Wednesday: https://www.youtube.com/EfiPylarinou
📌 Spotify Podcasts. Follow here: https://open.spotify.com/show/5bRkZEYHSwPiGx7vTqylw6?si=Mg3hN5PDQ86K10GjeK52jw
📌 Linkedin: https://www.linkedin.com/in/efipylarinou/
📌 Web: https://efipylarinou.com/