UnionPay launches its QR code payment solution, QuickPass QR Code, to compete with WeChat Pay and Alipay in China
Plans to expand internationally, including to Australia
Could Australian merchants adopt QR code technology to serve Chinese visitors?
Point of View
In an effort to compete with Alipay and Tencent’s WeChat Pay, UnionPay has entered the QR code mobile payments market, launching QuickPass QR Code in partnership with more than 40 Chinese banks. Customers can access QuickPass QR Code through their mobile banking apps. UnionPay has rolled the service out in mainland China, Hong Kong and Singapore, and it plans to extend the service to Thailand, South Korea, Indonesia and Australia.
Up until now, UnionPay has continued to pursue mobile payments with NFC technology since it launched Union Mobile Pay in 2010. In 2015, QuickPass was introduced, and in early 2016, UnionPay formed partnerships to offer Apple Pay, Samsung Pay and Huawei Pay through its network. However, these have all had lukewarm take-up, with UnionPay mobile transactions currently only accounting for around 1 per cent of the market in China.
The Chinese tech giants quickly cornered the mobile payments market in the early 2010s by using QR codes, an alternative technology to NFC. Alipay and Tencent opted for QR codes to circumvent the monopoly power of UnionPay and the mobile operators. The technology does not need to use specific hardware or gain access an incumbent network, it only requires users to download an app. Therefore, consumers, who were already used to using QR codes for other purposes, could quickly and easily begin using Alipay and Tenpay (which now includes WeChat Pay).
Nonetheless, because UnionPay monopolises the card payments market and owns the only EFTPOS network in China, it continues to dominate the non-cash point-of-sale (POS) payments market. But as mobile and internet payments continue to grow, its market share is declining: In 2010, card payments made up 91 per cent of non-cash payments by value, but by 2015 this had dropped to 72 per cent. In contrast, the share held by mobile payments grew from 1 per cent to 13 per cent over the same period.
So now UnionPay has finally come to the QR code party with QuickPass QR Code, just as EMVCo releases its new global standard on QR codes. But in contrast to Alipay and WeChat Pay, which are highly integrated with their ecommerce and social apps, respectively, QuickPass QR Code will only be a digital wallet. With Alipay and WeChat Pay only being secondary services to keep users on their primary platforms, perhaps technology is no longer the driver behind the choice of mobile payments provider.
UnionPay does, nevertheless, have a competitive advantage over its QR code rivals. QuickPass QR Code is being rolled out globally by leveraging its extensive merchant-acceptance network to target the ever-growing number of Chinese international tourists. QuickPay QR code also has a higher degree of security than Alipay or WeChat Pay, as it uses tokenisation, and it offers a chargeback protection to merchants. With increasing QR code fraud, these are valuable features.
UnionPay has made significant inroads in the Australian card acquiring market. Terminals issued by all four major banks have the capability to accept UnionPay, although it is the merchant’s decision whether to do so. Large retailers, Woolworths, Myer, David Jones and Westfield are accepting UnionPay, and nearly a third of Australian retailers which accept UnionPay also accept QuickPass.
Australia is a popular travel destination for Chinese tourists, with over 1 million people visiting from China in 2016, which has driven the acceptance of UnionPay here. While UnionPay intends to roll out the QuickPass QR Code service in Australia in coming months, it remains to be seen whether banks and merchants will embrace the technology. Elsewhere in the Asia-Pacific region MasterCard has already introduced QR code technology. However, it has seen low uptake owing to a poor user experience at the point of sale, where the customer must manually enter the transaction value after scanning the QR code.
Unlike in China, QR codes are not used in Australia for making payments, although they are used for the likes of airline frequent flyer services, loyalty programs, event ticketing and bike-sharing. In contrast, contactless card payments, which use NFC technology, are ubiquitous in Australia. The culture here is to tap a card, not snap a code.
As such, there is little incentive for merchants to offer QR code services to serve Australian residents. Whether they would roll out QR codes to capture the Chinese tourist market could in part depend on how easily the service could be integrated into existing POS processing. A simple software download might be viable, but requiring additional hardware, perhaps not so much.