This article was originally posted on forbes.com
Even before the coronavirus pandemic struck this year, the mobile payments market was on course to experience unprecedented growth. While the pandemic has dealt a serious blow to the global economy, it has given the digital payments market a boost as demand from consumers and businesses for a contact-free shopping experience has surged. Figures from Payvision suggest virus-wary retailers and consumers are driving a spike in usage of e-wallets and proximity payments as they shy away from traditional chip and pin.
In China, digital wallets have been a part of everyday life for years, and mobile payments account for more than 80% of all transactions. With the country now poised to become the world’s first cashless society, at least one mobile wallet company is looking to the future beyond COVID and thinking about how its technology can be even more widely used after the virus is gone.
AliPay, China’s biggest mobile payments platform with over 1.3 billion users worldwide, has made every effort to ensure it becomes ubiquitous in the post-virus economy. The platform’s parent company Ant Financial was incredibly quick off the mark during the early days of the pandemic to implement and run the Government’s Health Code software aimed at stymying the spread of the virus in China. The ‘traffic light’ system saw the wallet app’s algorithm assign a red, yellow or green colored QR code to users based on their recent travel history and medical records. A person given a red QR code is told to quarantine for 14 days; a yellow one means the user may pose a risk and must quarantine for 7-14 days, while a green QR code means the user can travel freely around a city. While the Health Code seems like a short-term solution to a crisis which could soon be resolved with a vaccine, it looks as though its usage will continue.
Last month, China’s President Xi Jinping spoke at the G20 summit in support of the QR Code system being used to facilitate international travel, calling on other countries to adopt the technology. Although the world’s hopes right now are resting on a COVID-19 vaccine, it does not seem unreasonable that other countries will follow suit as the emphasis on reopening global travel increases. Thus far, dozens of other countries have introduced what could be described as less intrusive versions of China’s system after Google and Apple collaborated on contact tracing API, which has a greater priority on ensuring users’ privacy and security. Of course, China’s system has not been without its critics both domestically and abroad, who have accused the Chinese government of leveraging AliPay’s technology as part of a broader drive towards surveillance culture in the country. In spite of this, the Chinese government has won plaudits from the World Health Organization for its efforts in successfully curbing the spread of the virus, with technology from AliPay (and competitor WeChat pay) an instrumental part of this.
AliPay has also increased its presence in a number of other areas during the COVID-19 pandemic. For example, it speedily introduced “zero contact” loans for millions of merchants through Ant Financial’s online bank MYbank, in a partnership with 100 Chinese banks. In a bid to encourage participation, interest rates were waived for 360,000 offline micro-merchants in the city of Wuhan as it first emerged from a coronavirus lockdown.
Digital coupons were another innovative idea – one designed to increase spending and push growth in the virus-hit Chinese economy. Just over two weeks after their launch on July 1, more than 10 million small businesses had participated in the program.
The platform also announced a three-year plan to aid the digital transformation of 40 million vendors. By providing incentives, AliPay encouraged developers to create mini-programs for the AliPay app that facilitate contactless services, such as food deliveries and medical consultations.
AliPay’s efforts have all been part of a larger effort to fully “digitize” Chinese society and make its technology indispensable in daily life beyond the coronavirus pandemic. Ant Financial CEO, Simon Hu, summarized: “We firmly believe that after the COVID-19 outbreak, service providers who are able to tap into the power of digital technologies will come out the strongest.” In all likelihood, AliPay’s efforts during the COVID-19 pandemic will pay big dividends as China forges ahead and embraces the digital future.
There could be a lesson in AliPay’s approach to the pandemic, particularly in how it has understood and adapted to the new ways mobile users interact with their devices. COVID-19 has given the global digital payments market a boost, still the bigger platforms in the United States and Europe need to harness that forward momentum and find ways to make their technology vital in everyday life after the virus is gone. Although the world will eventually return to normal, it may be the case that how we shop, travel and carry out business has changed permanently – and payment platforms will need to reflect that change.