Visa, MasterCard lost before the electronic payment application

Tram Ho

Credit card companies like Visa and MasterCard are losing money to an electronic payment application when Asians move on to not use cash.

According to data from the World Bank, Nomura and the Ministry of Economy of Japan, the rate of using credit cards is only 10% or lower in Thailand, Indonesia and Vietnam, while mobile payments are from 47%. 67% of these countries use it. In China, where daily transactions mostly take place on smartphones, many people grow up without ever seeing a credit card.

While mobile payment service providers entice users to expand their services, credit cards go through a tough battle to regain market share in the world's fastest growing region.

According to Nomura analyst Yasuyuki Fuchida, despite the large network of credit card companies, the cost of access is expensive, leading to other firms developing a non-cash payment platform more convenient, less expensive. more by mobile technology.

Another barrier is that more and more Asian governments make their own payment platforms, preventing customer data from being transferred to the US. For example, India launched the BHIM mobile payment application in 2016, which transfers money between different banks without the need for a Visa or MasterCard network.

The government of Narendra Modi also drafted a policy, regulating e-commerce companies and social networks to keep data inside India. The Central Bank of India also requested Visa and MasterCard to keep customer transactions data within the country.

Visa and MasterCard have long dominated the payment of credit and debit cards, collecting user fees from retailers, banks as well as users in some cases. But now, they are being challenged right in Japan, the place that seems safest.

One of their competitors is PayPay, Yahoo Japan and SoftBank mobile payment platform. Users can shop and pay with QR codes on smartphones, it's more convenient and hasn't been charged until October. It's so good that users can't stop using it.

PayPay has 6.66 million users, accepted at more than 500,000 stores. Generous promotional campaigns such as a 20% cashback in the limited time have helped increase the number.

Unfortunately for Visa and MasterCard, PayPay and other applications do not rely on credit card networks to process transactions. According to a survey by the Ministry of Economy, Trade and Industry in 2017, only 25% of small restaurants like cafés at tourist sites accept credit cards. 42% of businesses that do not accept credit cards think that processing fees are too high.

According to Masayuki Yamamoto, president of Yamamoto International Consultants, payment of QR codes is cheaper than credit cards in terms of both pihs and equipment installation. Although the fee depends on the type of card and the business owner, usually the credit card company collects from the business owner 3.25% to 5% of the transaction value. Small business owners are often charged more.

In China, the situation is quite different. Many people have never seen, let alone use, a credit card. Platforms like Alipay and WeChat Pay dominated before credit cards had a chance to catch up.

The strength of credit card companies is the ability to operate across borders. Now, that advantage is also challenged by Alipay. Eric Jing, CEO of Ant Financial Services, the company behind Alipay, said it has 1 billion users across Asia and can add 200 million new users each year. According to Jing, more than 300,000 stores in Japan have accepted Alipay, five times more than in August 2018.

In this country alone, credit cards such as Visa are generally accepted at tourist destinations. Even China 's own credit card system, UnionPay, also faces difficulties with the pressure of mobile payments.

UnionPay was released in 2002 by Chinese banks on the initiative of the government. The system has its own application but Alipay is still popular with users because it has many services such as debt, financial investment, online shopping, car calling.

Two other ambitious names are Go-Pay of Go-Jek and GrabPay of Grab. Users can deposit money into accounts with bank accounts and pay at the store or pay service fees. They do not have to apply for a card from Visa or MasterCard but only need a smartphone.

Grab, Go-Jek or Alipay have an important advantage, that is, they do not make money from mobile payment activities. Instead, this is a way to attract customers and thereby provide other paid services such as investment, loans, insurance.

While Asian mobile payment platforms are mostly limited in their homeland, they are investing in other countries. This is a sign that they anticipate the ultimate cross-border trading rules will be relaxed. If this is true, the battle between giants like Alipay and Visa has just begun.

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Source : ictnews