In China however, they throw away that pride of creating the greatest and shiniest. Instead, they start off with an "inferior" product but use the scale of their population to bring down costs and they try to ensure everyone has access. The top example is smartphones. In the article itself, "Even the buskers were apparently ahead of me. Enterprising musicians playing on the streets of a number of Chinese cities have put up boards with QR codes so that passers-by can simply transfer them tips directly." China starts off with a product that gives every citizen a chance to get in on, not just the wealthy, and they build up their economy from the bottom up, rung by rung.
The way I see it, we have democracy in politics but in products, its authoritarian because its guided by the billionaires and wealthy. In China, they have an authoritarian political system, but democratic economy space because they can actually vote with their wallets.
A big reason why QR codes caught on in China is because everything else was really bad. In america, credit cards were 'good enough' compared to what was in china, so QR codes didn't catch on that quickly. Also because it's a wealthier nation, the typical merchant could afford the hardware required for processing cards, but QR codes all you needed was a print off and the mobile phone you already had as a merchant, which made more sense for china at the time.
Then network effects kicked in and QR codes became the standard.
You see similar environment specific things that created this kind of stuff. Like whatsapp took over the world because SMS cost something, while in the USA it was effectively free and good enough, so whatsapp wasn't a good enough thing to switch to.
However, I don't think credit cards in China are as popular as it is in the USA. I could guess most Chinese people don't have any credit card.
Chinese traditional culture encourages saving, not loaning. And taking small loans is exactly how credit cards works. So maybe that's why people here don't like credit card very much.
QR pay (Or mobile pay, OR more specifically, Alipay and Tenpay etc) can acting like a gate way between seller, user and bank. It can pay with the money you already have, no need to loan from the bank. So I think it's a Culture Match.
Beside that, take a wallet (Which is needed for protecting your credit cards from been scratched) everyday is a burden. I could really be happier if I can get rid of it from my EDC (I can't get rid of my phone, so).
Anyways, debit cards work just like QR pay does, just like UnionPay already does. The problem QR codes are solving is the lack of a POS terminal and stream lining the swipe. Many countries have an even better technology in NFC contact (including China, many newer UnionPay POS's include NFC, though the card must have a chip to support it). Then you could just glue your debit card to the back of your phone...(or use NFC in your phone via something like Apple or Android Pay).
You would be surprised to learn that this is far from the truth.
This paper gives a couple interpretations, none of which are as strict as the one I use. I wonder if I mixed up "conversational implicatures" with a heuristic for logical implication.
In any case, I've apparently been wrong about the meaning of a basic English word my whole life, and I can't find a good cover story to hide the mistake.
If we're talking grammar, then it is "a couple of interpretations".
Traditionally China is known as a nation where people save, and debt was not seen favorably at all.
This is a cultural thing, which has likely been wearing out since the 1990s.
I think it was the Reagan administration made credit card debt interest tax-deductible and the cat was out of the bag.
Of course, China's rapid rise in personal as well as private and public sector debt is evidence of a changing society.
While that is a lot of debt, it is nowhere the same as saying you have $500k of debt on credit cards. Credit cards are unsecured debt; it's debt with little or nothing behind it.
Mortgage debt, though, is a secured debt. In theory, you could sell the houses, maybe for more than you paid for them, and possibly or likely more than you owe on them (that is, you gain the equity). Of course, you could also be upside down, but you still have the property, and you could just sit on it, rent it out, and continue to make payments on it from rent (or whatever) until the market comes back.
NFC isn't "better technology", just different to QR code. NFC also handles 1 payer at a time whereas QR can handle multiple, in parallel depending on the physical display size.
NFC requires special equipment. QRs can be displayed on screens and printed on paper which makes them incredibly more accessible and far-reaching.
NFC is invisible, which looks better IMO that a block of pixels with the occasional ill-fitting logo in the center. But tbh at the end of the day they are doing the same thing, the big difference being one is using some new sensors and electromagnetic frequencies to do the job, while the other is using visible light and a sensor that is installed on every phone in the world and everyone is familiar with already.
However I think the image recognition processes must be improving as the last couple of times I've used them (for TOTP setup) recognition was very fast, < 2 seconds of the camera app. coming on as I was moving the phone into position.
Meanwhile the whatsapp web code reader on the same device and same qr code takes more than 6 seconds of careful aligning, and even on modern devices there are still some hilariously bad code readers (having to manually align the corner squares with an overlay)
A good QR reader does not require much lining up, just pointing the phone in the general direction of the code is sufficient, I'm consistently surprised by how fast some QR readers match codes.
That's significantly less work than having to bring your phone right next to a reader.
The annoying background video shows it: http://mobilepay.dk/da-dk/Pages/mobilepay.aspx
(and the payment sent screen can be spoofed)
For tips it seems fine
Strange, I never carry a balance, and I still get all the points common in the credit card system.
There are many people that are happy to just pull out the credit card to buy beyond their means but a lot of the time people are using a card backed directly by their Bank account.
Unlike China however, adoption of digital, low-barrier payments is extremely low here. I mean, hell, we're mostly buying paper bus tickets, while local public transport is sloooowly starting to roll out RFID tickets & readers.
All I'm saying is, I find the cultural differences and the impact they have on our day to day dealings (which, on the surface, seem to be the same globally) deeply fascinating :)
That hasn't prevented the demise of cash, and MobilePay, Swish etc are popular for personal and commercial transactions.
The RFID card works on all public transport all across Denmark. Sweden has regional systems. I don't know about elsewhere.
The leader for this is London, where any contactless payment card works on public transport.
Only last week did I actually see one of the new 100kr ($12) bills.
Debet card terminals are everywhere, some churches have even put them next to the collection plate - and it is not uncommon to see street vendors using wireless terminals.
I'd guess most Danes realise credit cards are the ones where you often pay 1-3% extra, which is a difference you don't often see in the USA or the UK — there, it's limited to things like plane tickets.
I'm surprised Germany is so far behind switzerland though, I mean, even when I lived there 10 years ago I could use my debit card via chip in a kiosk and have my train ticket very quickly.
I don't think standard Beijing city buses take wepay yet. You still hand over paper bills to the conductor or use your beijing transit NFC card.
Online-QR-code-tickets bought per Smartphone are now common too though.
A week ago I was in this restaurant and I had almost no cash (as usual where I live in Northern EU); the restaurant terminals were rejecting debit cards from the two biggest banks in the country. After several attempts, I just paid with my credit card (which is configured to pay immediately from the account, not at end of month) and that worked.
That's probably because a credit card can go through with a transaction even if some of the involved parties fails to respond.
While services like Android/Watsapp were created in the West and do service the lower end market, they still follow the "leader", isn't seen by the population as "cool/hip/etc." Even with credit cards, there are many merchants here that don't accept them (especially Amex) and Visa because of the prohibitive fees. The attitude in America is, define your market (high end/low end) and then extract the absolute amount of wealth you can, and defend your market share by any means possible.
In contrast, as you saw with the busker in the article, when it is rolled out in China, it is truly (almost) for everyone. They try to use economics of scale to get everyone on board so the entire nation is moving as a collective. Another example is the high speed rail; I recall reading an article that even though wages doubled, the fares didn't budge at all. It just allowed more and more people to take advantage of a good service. In America, you'd bet they try to increase fares as much as possible to extract as much as possible out of the consumer. Obviously there are problems, as with inferior phones, but when everyone is on board, there is an acceleration in innovation and they start solve those problems. Then you see things like people wanting higher end models and companies are forced to innovate. A company like Xiaomi which dominated suddenly drops to 4th place and needs to innovate - that is a sign of a healthy market.
Having lived in China during the time these online payments were launching, I have a different view. China launched a new online banking innovation law a few years ago. I can't find any sources, but I remember the banks complaining that this would give online payment providers an unfair advantage or something like that. The main players today Alibaba (Alipay) and Tencent (WeChat) were attacked by the banks in a big public debate. Today, they're the leaders.
I think it's rather a classic case of disruption. The incumbent banks are afraid of destroying their high credit and debit card fees, so don't invest in alternative products for payment transactions. Meanwhile, political interests don't make it a priority to innovate in the banking arena. Whereas the Chinese government basically said to the banks screw your concerns, we think this is a good idea and want to do this. Hence, when you have payment innovation in the US, it's limited in scope (PayPal and Google Wallet on the Internet only) or has to build on top of existing payment transaction infrastructure (Square and Stripe edit: and Apple Pay).
I bet if not for lack of political will against the banks and other incumbent interests, the US could make a similar banking innovation law and Facebook, startups, and the like would get in on it really fast. There's nothing inherent about QR codes that make them less preferable than tapping credit cards. In fact, I prefer QR codes.
I disagree. CC fraud was unknown to me until I moved to the USA. The security chip was not used for a very long time in the USA and just started to be a thing. First version of chip enabled CCs had no pin. I am not sure about good enough.
Also, the whole reason Europe had the chip and the US didn't was because phone lines in the US were better than ones in Europe, so it was vastly easier to do a quick authorization check in the US. The phone lines were not "good enough" in Europe, so the chip and pin system was created as a way to authenticate locally.
This does nothing for online payments but very effectively curbs fraudulent card present transactions.
The chip is an active participant in the authentication.
it will receive digital signatures from the bank and the terminal, and if said signatures are found valid, release the payment info stored.
This is a really interesting history rewrite, since it was released a year and 3 months later.
It also didn't define the low end of the market, since at that point, the iphone was just getting apps (2 months earlier is when the apple app store was released)!
America needs to admit that it's no longer the bastion of innovation that it once was (I say this as an American. If anyone doesn't believe me, just take a trip to East Asia). Americans are complacent and fine with not having the cutting edge (not to mention our failing infrastructure).
I wish there was a way to change this attitude, but it feels like most people are too busy working and paying off their student debt. If every American had to fly to Tokyo or Seoul for a week, I think we'd put up less with our failing infrastructure. Or maybe this "Everyone for themselves, it's someone else's problem" greed mindset is too ingrained in our DNA.
In case of China, put it into another perspective. Chinese banks have long been state-owned and very ineffective. Credit cards are incredibly difficult to apply, and cumbersome to use after you get it because the banks refuse to pay you back in case of frauds. This is why WechatPay/Alipay could be so successful:
1.There is no existing dominating technologies.
2.It mitigate the fraud problem that it is harder to stole/clone your card.
3.The onboarding process is really easy.
All in all, I think mobile payment takes off in China is pretty logical, while in other countries, like Japan/South Korea, it is not common at all, even though they are close to China culturally and their economies are considered to be more advanced than China's. This is a classic example of second mover advantage, that China could enjoy this great leap forward, only because it is not advanced enough before so doesn't have all the legacy to carry along.
However, I agree with you that US needs to ditch the illusion, that it is still the norm of innovation and others should follow. The world is getting diverse once again after the cold war, more and more innovations will happen elsewhere, like in East Asia or India. Time to let go of that useless ignorance and set down to truly listen and, learn.
The thing is though is that the US has a habit of getting these things decades after they're introduced.
The US has just started EMV rollouts and it's still the only country that depends on signatures. Most of the developed world has had EMV with a PIN for what, 15 years now?
Contactless payments have been widespread in Australia (home) for at least 5 years and by "widespread", I don't mean a few particular retailers support them, I mean everything from the independent coffee or fish and chip shop down the street to every major supermarket chain, cinema, Starbucks and McDonald's.
The US is just barely keeping itself 5-10 years behind the rest of the world.
And none of your comment actually happened.
So yes, it actually can happen. But it doesn't require digital cash.
In case you are arguing that the <1% fee should be considered as a part of the overall "interest" rate, well, that small fee does bring you the real convenience.
I lived in Beijing for 9 years. It changed much since then, but the tech brought out was solving mostly local problems with local solutions. When I started living there, I used to pay for rent by withdrawing 20K or so RMB from the ATM machine (in 100 bills), loading it into a bag, then giving it the landlord. I never did that in the USA before, never had to, it wasn't the problem the USA had. Now I can use Wepay, oh, or I can go to the bank and do a direct funds transfer (as a foreigner, I could never get ebanking setup).
> If every American had to fly to Tokyo or Seoul for a week, I think we'd put up less with our failing infrastructure.
All of these places have their own thing. Don't get confused and think that the problems they are solving are much better than the ones we are. I've had plenty of trouble in Tokyo that I wouldn't experience in the states (dammit, streets should have names!), they are just different.
That's probably the same kind of stuff here. The US did develop a universal non-cash system decades before other countries and now is stuck with its quirks. Europe started later and is slightly better. China started even later and could just use the fact that even poor people had an internet connected computer with them at all times except in the shower.
Its an attack from both sides, though. Monied established interests systemically manipulate the economy through the state to prevent competition and innovation from gaining traction, while the people are indoctrinated into anti-intellectual and anti-progress ideologies and thus personally resist change.
Both are done for a profit motive, so the real problem is probably the simplest to acknowledge but the hardest to solve - corruption.
"(3) NO RESTRICTIONS ON SETTING TRANSACTION MINIMUMS OR MAXIMUMS.–A payment card network shall not, directly or through any agent, processor, or licensed member of the network, by contract, requirement, condition, penalty, or otherwise, inhibit the ability of any person to set a minimum or maximum dollar value for the acceptance by that person of any form of payment.”
It does not inhibit state or local jurisdictions from banning merchants from setting card minimums in their individual credit card consumer transactions.
The Durbin amendment (see quoted statute in other comment) prevents networks from forcing small merchants to accept small charges, not merchants from imposing minimums on consumers.
State and local laws can still prohibit CC minimums via statute or via licensing.
That is exactly the type of agreement that the Durbin amendment prohibits. I don't see any mention of state or local laws prior to now, so that seems like a complete non sequitur to me.
Yes, exactly like I said. It prevents processors from requiring merchants not to have minimum charges. In other words, it prevents processors from making agreements with merchants where "requiring minimum purchases is a violation of the merchant-processor agreement". It doesn't stop someone else from stopping the merchant from having a minimum charge, but it does stop the type of merchant-processor agreement that you described.
The start of the thread was the claim that the Durbin amendment made it illegal for merchants to set CC minimums for consumer purchases. That's the false interpretation.
> the law requires that processors allow merchants to have a minimum purchase requirement of up to $10
In China the app will be made chabudao (good enough). It will use QR codes because its fast and its what your coder knows and its whats on everyones phone. Security exploit? Shenme? Consumer protections? How do I say "caveat emptor" in Chinese?
There's something to be said for the Chinese approach. By making something stupid, they've made something smart. Not all innovation requires technical accomplishment.
Edit: after thought. Credit where its due to alipay and wechat. The QR-code works even when my phone is temporarily without a connection. I don't know what goes on in the background, but it def saved me a few times from looking like an idiot with no way to pay for something.
Another point about dumb being smart. Alipay does have a sound based transaction system (like what crinkle tried to do). AFAIK no one ever uses it. The plain old dumb QR code is faster and better understood and is therefore better.
Chabuduo, but again your spelling is chabuduo OK
But with that being said I don't think China has the same fraud problems that the United States and to a large extent the West does. You can build insecure apps in China because nobody is trying to steal money from them like they do in the U.S. or something.
Except the rampant nepotism and outright corruption that means the same oligarchy controls the future of tech there too?
Why is it every time china is discussed, people have to repeat the same trite false things.
China is a developing nation. Developing nations don't create the "greatest and shiniest" things. The US didn't create the greatest and shiniest things when we were developing. Germany didn't create the greatest and shiniest things when they were developing. The same thing with Japan. The same thing with Korea.
There was a time when american goods were considered shoddy and poor quality. There was a time when german goods were considered low-end. Japanese goods were mocked for being low quality. Korean goods the same.
>The way I see it, we have democracy in politics but in products, its authoritarian because its guided by the billionaires and wealthy. In China, they have an authoritarian political system, but democratic economy space because they can actually vote with their wallets.
Right. Because in the US we can't vote with our wallets.
The last events in the US election system have cast a long shadow of doubt on this statement.
But having concrete evidence that those who you "vote" for consider your desires nil? Very valuable when discussing how undemocratic the US is.
Presuming your lame post was actually referring to the presidential election, that was never direct democracy to begin with.
I would call that a defeat. The US constitution is clearly past its sell-by date.
If you cook a meal you don't like, do you burn down your kitchen?
There are a non-trivial number of people (including me), who are happy when the federal level fails to legislate things that can be legislated perfectly fine at the state level. There is no reason to think that the laws in California should be the same as the laws in Michigan, much in the same way the laws in California shouldn't be the same as the laws in France.
Code that you can't test and debug before running in prod.
And in which you're allowed to not check certain cases. (when writing code, you can omit checking bad input, but you're not morally allowed to do so)
While we were putting together the first apps, China was still by an large a poverty-ridden manufacturing-exclusive economy, Hong Kong being the exception. It's only in the last 25 years or so that they've finally opened up and started really growing, and when they did, all of this technology was already more or less proven and available for them to use.
The real test will be the next 50 years or so, when these various systems will need to be upgraded to see if they can keep the same pace and keep everything exactly as, for lack of a better term, shiny. :) So far they've done well, I hope they continue to do so.
It's also worth noting: All that's been accomplished could have been accomplished without the Chinese central planners too; the real problem for America and countries like us is the crony capitalism, not the lack of central planning.
Are you so sure of that? http://www.businessinsider.com/princeton-and-northwestern-st...
The market has already been primed for them to engage in a follower strategy.
Thus, in the US, I suspect that mobile payments haven't taken off as much because they are only very slightly faster to use than a credit card, as opposed to cash, which is much slower with people counting out amounts and cashiers counting out change. Before Android Pay came out and there was Google Wallet, I tried using Google Wallet but was super disappointed - it failed about 5% of the time, where my credit cards almost never failed. Lately, though, I've started using Android Pay and I've been really impressed. Just one tap with my phone and it's done, and it's very reliable. Still, though, it's really only slightly faster than swiping my credit card, especially for small amounts where a signature isn't required.
Since returning to the states from china, I've been happily surprised that I can just tap my credit card to pay at many terminals. This still pales in comparison to austrailia, where this tap to pay seems to be ubiquitous.
For example, Apple Pay works great at Whole Foods. I use it every time. Other people in line painstakingly pay with credit cards, despite holding an iPhone in their other hand. The new chip cards take longer to process, even, 5 seconds or so.
Yeah but no. Come in the UK and you'll see that mobile payments are seeing widespread acceptance. I can go weeks without having to pull my Debit or Credit Card.
I'm in Ireland and hate carrying change so I use my phone all the time to pay, I only end up going to the ATM ~ once every 2 weeks or so.
Some people working in shops aren't used to paying with phones yet but you just tell them it's the same as contactless card and it works out fine.
Ever since I've been back to the states from china, I've used the ATM only around four times in the last year. My wallet also feels much more empty given the density of $20 bills over 100 RMB notes.
USA != the west. Paying by credit card is pretty uncommon in large parts of Europe. Most stores I frequent don't even accept credit cards. But debit cards with pin&chip and now wireless NFC pin&chip is very popular.
I hardly ever use cash, but the only reason I have a credit cards is for some US webshops.
I have only managed to use Android Pay a couple of times and the store that I did that with has removed it since then.
When it works, it is approximately the same level of annoyance as a credit card. When it fails, it is so much worse. I just don't see it taking off here in its current form.
Even worse, I think, is the proliferation of mobile app payments. Where you have to download the specific app for the business. (Burger King is IMO the worst offender - you cannot order in their app, but you can pay in it, so rather than support NFC and not wasting 50MB of space on my phone they make me download their proprietary junk and reenter my card info again just to avoid having to swipe the card...)
You have got to be kidding. Handing my card over to someone who disappears off with it? Those bloody awful faux-pens to sign on an LCD? That's your idea of easy to use?
Paying for things in the US feels like the stone ages.
Does this bother you? If your system can't handle this scenario then it is flawed.
>Those bloody awful faux-pens to sign on an LCD?
Not required in lots of locations unless it exceeds some value.
>That's your idea of easy to use?
Yes, I put a card in a machine, wait 5-10 seconds, and take it out. Done.
In a sit-down restaurant, the waiter drops off the check towards the end of the meal. I put my card in the holder and he grabs it and returns with a receipt to sign and write a tip amount. Not quite as fast as the waiters who have payment processors they walk around with like in Europe, but close.
Trust me, living here feels that way too, except everyone is at pains to tell you that it's the greatest in the world. And don't get sick!
The developed economies were already mostly "cashless." Very little cash has run though most malls, hospitals, schools or even supermarkets for decades already. "We hqave something good enough" is definitely at play.
That said, we need to keep in mind that financial transactions has been close to an airtight oligopoly for a long while. 2 CC companies have run the show for decades. They have very deep "moats" with spikes and crocodiles. One of the big one is the strict regulation, which heavily favours established incumbents.
It's yet to be seen whether China (+India, etc.) will develop a dynamic market for financial services in their cashless economies, once the dominant services become established and entrenched.
Cash share of payments in Germany and Austria (by volume) were still >80% just a few years ago, see p.38 of https://www.ecb.europa.eu/pub/pdf/scpwps/ecbwp1685.pdf
BTW used to work for a company that did telecoms consultancy in Africa and in Angola they preferred microwave for trunk links as it was harder for the rebels to damage.to
I can't really let that comment stand. Cash transactions go way faster than credit card transactions in my experience. (They'd go faster still if prices were posted with tax included, but that's a different issue.) Hand over the card, swipe the card, hand back the card, wait for the receipt to print, get a pen, sign the receipt, hand that back VS Hand over the money, count the change, hand that back.
Don't get me wrong, I can imagine how credit card interactions should be able to go faster. But in practice, they don't. If anything, they've gotten worse lately, since the chip cards take a while to do their processing (and then you still need to sign the stupid LCD screen with the terrible stylus).
Mobile payments haven't taken off in the US because the big players are all fighting to the death in the space.
I suspect that the space was equally as fractured until the big players in China simply got the "Party Blessing" and that was the end of the discussion.
In some countries (I've seen it in Canada and Sweden) there are machines that deal with the change for you (this is separate from a self-check out machine). They either deal with just the coins or with notes+coins, without any cashier interference
- Low transaction fee & minimal barrier. For merchants taking WeChat pay, the transaction fee seems to be a flat 0.6%, compared to 2%-3% in the U.S. For the food cart vendors and similar one man shops, they just use the person-to-person payment feature (like Venmo), which has no transaction fee and does not need a merchant account. While Square helped somewhat in the U.S., the transaction fee, for many, is perceived as a rip off.
- Cards are a pain to use. In the U.S. you sign. In EU you use a PIN. In China you do both. Usually, it seems slower than cash! Mobile payment, comparatively, is a breeze. However, it's quite difficult to argue that taking out the phone, unlock it, open the app and show the QR code is easier than using a card in the western world.
There are some deeper historical reasons for these two conditions, which I would not dive into in this comment, but needless to say, it's a much, much more fertile ground for mobile payment to blossom.
Where the heck is 3% even allowed in the USA?
> However, it's quite difficult to argue that taking out the phone, unlock it, open the app and show the QR code is easier than using a card in the western world.
Tapping the card to the NFC terminal is super easy. You don't even need to take your card out of the wallet if its in front.
The whole point here is how to entirely get rid of the wallet. your ID, your cards, receipts, parking tickets etc should all be digital. in fact, that is exactly what WeChat/Alipay are offering or battling for.
WeChat based ID card with approval from the Public Security Bureau:
I don't know what it means, but reading this all I could think was how there is absolutely no way Penndot is ever going to make Drivers Licenses in PA digital. Ever. They only just let people register to renew online like 2 years ago. You still have to drive to the DMV anyway, you can just sign up to get it renewed in advance for "fast processing".
State institutions resist technology to a pathological degree. At least in regards to ease of constituent use. They all have websites and have facebook groups and such, but they (by law, usually) never use it to improve the experience interacting with them.
There's just no plausible scenario where I get arrested and taken to jail simply for not having a physical ID with me.
Both Alipay and WeChat have spent billions subsidizing and discounting. Go into a restaurant in Beijing and there's a good chance you could get 10 or 15% off your bill by paying with WeChat.
So given that it's both cheaper for the merchant and cheaper for the customer it's no surprise it has taken off so much.
But to add to that, I would love to live in a world where I don't have to play the credit card game, but using cash in the U.S. at least is putting you behind. The prices are the same for an item whether you use cash or not, except with even the worst credit card you can get 1% cash back.
Capitalism, and hence consumerism, is a relatively recent thing in China, dating only to the 80s. Therefore, the well-developed mechanism in the Western world that encourages and protects it are still lagging.
One significant aspect of it is consumer protection. Chargebacks are almost unheard of in China. Fraud protection is pretty much nonexistent. The results are twofold. First, security is an utmost concern, which explains the PIN-and-signature requirement in POS. Second, free of the responsibilities, banks can offer a much more attractive interchange rate.
Another aspect is credit is not as developed in China. Of course, culture plays a large part as well, as traditionally Chinese value saving over spending. Therefore, there aren't crazy cash back schemes that American banks offer (credit card points do exist, but nowhere as lucrative), and people don't lose anything by switching to mobile payment, which are basically prepaid cards.
These two situations are of course rapidly changing. Younger generations are much more willing to take credit (and you hear horror stories of young girls using their naked pictures as collateral), and more and more company realize consumer protection can be used as a competitive advantage. But mobile payment took foothold before traditional card did, so looks like they are here to stay.
I'm not fond of consumerism at all, but the way each country structure and culture absorb it is interesting.
Only if you're a merchant. Most of the 2-3% fee is transferred to consumers via reward programs. It's important to understand that merchants and consumers face different incentives and that US card networks have aligned themselves with consumers.
This is what everyone assumes, but it turns out it's false. We are fortunate to have some experimental evidence on this. In 2003 Australia slashed interchange fees through regulation. Prices did not decline.
"...retailers saved more than $400 million (Australian) annually in fee revenue after interchange rates there were cut, but there was no evidence that they passed any of the savings on to consumers. Instead, consumers saw higher card fees, a reduction in loyalty benefits, and the introduction of surcharges of up to 3% on credit card transactions, the report found."
Cash is way faster, hands down. I bothered to compare the difference once, since cards here are not the norm. We're talking between 5-10 seconds (cash register) vs 30-45 seconds, most of which are dead times (waiting for confirmation).
Edit (replying to child): This applies when paying with credit card and EC/girocard. I don't know what you mean by ATM circuit.
The ATM circuit often doesn't require an additional signature (although in some countries like IT it's still required)
I couldn't set up my WePay in time, so like the Author, I had to use Cash. And from my experience between a Tier 2 City and Tier 1 City like Shanghai, it is actually those Tier 2-3 City refuse to accept cash. They thought Cash were cumbersome. And Shanghai may be more welcoming cash / Credit Cards for variety of reasons ( Likely privacy ).
I tried to buy breakfast for $2, ~20 cents in USD, i didn't have WePay so I paid in cash. The Shop owner said she didn't have any changes and decide to give me the meal for free.
Over the 15 days, I kept thinking about QR code as Tech. Trust me, it is crap. I dont believe there is that much time difference holding up the queue as noted in the article. You have to Open up WeChat, and let each other scan, input your payment by youself, show them you have paid. To me this is very backwards. Octopus in Hong Kong, Scuria in Japan, Oyster Card in London Transport, Offline Mobile Payment from Master Card and Visa, All these are 10x better in UX. The merchants input my bill, I beep. That is it.
Then suddenly one day it clicked, and I knew why QR Code succeed. With NFC or any other Wireless payment, you need something, a electronics, a beacon or what ever for sellers to work. With QR Code, They "Print" a QR Code and laminated it. And you can photocopy as many pieces as you want. The barrier of entry for QR Code is so low every one could use it. At the expense of consumer UX.
And then weeks after I visited China, Apple announced in WWDC, iOS 11 will come with Auto opening QR Code in Camera mode. That, may have just made the friction of using QR Code much more bearable for me. And it is likely both tech will exist side by side in the long future. I cant see QR Code as it is used today ever getting replaced by the more expensive NFC solution, and NFC will likely stay in transport and other areas.
Can someone give me an example of what a merchant would encode into the QR Code that would then allow them to receive money ?
Is it a URL ?
And the merchant doesn't know this. Their setup process is typically: Open up WeChat, login, click the plus in the top right corner, pick Money, click receive money...
And of course paying and receiving is much easier once everything is setup.
1. Customer scans QR
2. POS operator hits given this is a realtime hit and noone else is hitting this QR at this time.
3. Customer received bill, hits OK. Confirmation sent to both reatailer and customer at the same time. Customer often shows retailer this has been successful. Receipt printed and handed to customer.
4. Customer walks away happy.
The transaction from 1-4 takes less than 2 seconds. Very efficient.
The stumbling of a new customer to get their phone out, activate pay, question if any special offers are in offer however drags this out to a vastly greater amount of time than using cash.
However, the tech UX is sound.
Edit: Live in China. Wish people could use cash as queues are much longer when the 'human factor' is added in/ Perhaps this will fade, but it has already been a few years and sees no fading as retailers add discounts, coupons, to the payment, which leads customers to click around their phone rather than being prepared in advance with discount coupons and cash.
P.S - I wonder if QR Code can be made in Circle shape rather then Rectangular.
OK, but presumably a very long URL with a lot of hasing/coding in the URL that not only describes the transaction but secures it, correct ?
QR Codes are an open-standard - they are not something that wechat made up - so could you use some other mechanism to transmit that URL ? Could I email the very same URL and expect it to work ?
The Shenzhen subway seems like an exact copy of Hong Kong's MTR, which uses the excellent and ubiquitous Octopus system. The MTR is its own entity and allowed to play favourites (or enable monopolistic behaviour).
I did feel screwed when I arrived in he Netherlands thinking my unionpay card to work, just to find out it was one of the countries besides India where it didn't. Thankfully, I could find some place that took credit cards...but I was freaking out as I didn't have much convertible cash as backup.
The EU limited fees for credit cards to 0.125% recently, and while EC (now bought by MasterCard and called Maestro for SEPA) is still cheaper, credit cards start being affordable for merchants. But almost none support it yet.
And Google still hasn't launched Android Pay, despite every ALDI having NFC. I'd prefer if there was a local NFC payment option actually.
Germany already had a well-working giro system by the time credit cards were invented – almost instant, free transfers between bank accounts were common.
Then, credit cards were obscenely expensive (and still are in some cases, many credit cards cost a hundred euros or more per year for the owner, and taking credit cards often costs 6-7% of sale price + 60€/month for the merchant, and merchants can’t ask credit card users to pay more, so merchants would go bankrupt if they’d do that).
And this is because credit cards in the US are only free and have bonuses because they’re basically a tax on the less educated, with high fees and interest. Germany, which traditionally has a culture where having debt means being guilty (literally, that’s the same word), obviously is far more cautious, so far less profitable.
And then the EC cards happened, which introduced the EMV chip, were safer, faster, and had far lower fees, so they were supported everywhere.
And then there’s privacy.
And the fact that the US – especially MasterCard, VISA and PayPal – love stealing customers money in legal transactions inside of Germany just because it violates US law (which, fyi, does not apply in Germany, although the US pretends it does), as  and  show.
All in all, credit cards are a horribly insecure implementation of a ridiculous system that only works when it can scam enough people, interferes with local law, and doesn’t fit the strict privacy morals of Germany.
They’ve been in an eternal race for lower prices since they started competing.
Also, it literally applies here – since the fees for credit cards were reduced, ALDI and LIDL introduced payment with credit card (which wasn’t possible before at all at them). Same with REWE and coop.
How can you say it doesn’t apply if it literally happened.
The EU reduces your transaction costs by 2% for all retailers there's no way they will pass this on to the consumer eg my morning Starbucks did not get cheaper
Without having used WeChat's approach with QR code scanning, it doesn't seem that different for the end user in practice. Either way, you're scanning an object you carry against some target environment and a merchant is processing the transaction for you. It's even closer once you use eg: Apple Pay with your CCs loaded into the Apple system - you're tapping your phone rather than scanning via the camera.
I'm guessing that the CC infrastructure simply wasn't there and pushing out EFTPOS units was a far higher barrier to entry than simply running an app on your newly acquired cheap chinese smartphone. As such, the CC merchants missed the boat whereas the big phone app companies got in on the ground floor. On the flipside, many Western countries had all the EFTPOS terminals already, so contactless just became the next iteration on that.
I don't really necessarily agree with the problem of the country building their commerce systems around Tencent, etc. as 'private companies' since most of the west hinges on Visa, Mastercard and to a lesser extent Amex. They're all private companies too. Maybe the government will step in and standardise the QR code system eventually to reduce the risk. I don't really see it playing out much differently to how the West did with CC contactless.
The difference is that anyone can accept WeChat payments, no matter how small their transaction volume.
I haven't been to Australia since 2002, so am a little out of touch. Are there small businesses like fruit stands? Do they take paypass/paywave?
What about buskers?
Regarding your question, anyone who previously took a CC via an EFTPOS terminal would now take paypass/paywave. It's not ubquituous amongst the standard sunday market/food truck retailers, but it's not uncommon. I went to a French food and wine festival a couple of weeks ago and the majority of them used EFTPOS, but they also not infrequently do the market circuit.
Essentially, anywhere that previously had EFTPOS now naturally has contactless, and as the critical mass of people who don't carry cash grows, more smaller retailers are pressured into getting EFTPOS. The terminals are handheld, battery powered and connected to the mobile network now so you don't even need electricity. Granted, I don't see a time when buskers end up get EFTPOS terminals.
It's the same in Canada.
Whenever I go to the US I feel like I'm going backwards in time.
when I go to pubs/restaurants with friends in Shanghai, one of us would be using AliPay to pay for the whole bill, then he/she would be using AliPay's "AA Pay" feature to show the QR code to get money from everyone. I guess your paywave card won't help you on that.
shared bike is extremely popular these days, it costs you $10c for a one hour ride. paywave card is useless for such innovative products - the amount of each transaction is too small, plus you don't want to see a card reader on each bike as there are 10 million such bikes now.
EFTPOS style devices were popular in China, the quarterly statement from Chinese central bank shows that around 6 billion debit cards and half billion credit cards were issued in total.
there are currently 10 million ofo/mobike shared bikes, 700k were added to Beijing in a single month (May 2017). there is simply no way you can attach a card reader to every single one of them.
> if the process is slow the customer just blames the store.
If the customer does not like long lines and slow transactions in a store - they will leave, and the processor will see less revenue from fewer transactions because of that
Oh and yes, When I leave the house I don't even take my wallet, everything is paid using wechat.
What would I do now if I have to pay with WeChat and I obviously don't have a Chinese bank account? Tourists don't have time to waste in banks and unless bank accounts are created and activated on the fly it would be pointless to open one. Maybe open an account in advance from home? Is that possible? Or WeChat and Alipay start operating with accounts in multiple countries.
I used Kuai Didi without the payment option easily enough, just hail a taxi with the app, pay the meter with cash, simple easy done.
Many merchants take credit cards, ATM machines are pretty ubiquitous now. By no means do you need Wepay to survive.
People are using Alipay and Wechat pay for everything, being online shopping, restaurants, supermarkets, train tickets, electricity, water, even some tax declaration. So it is not just a replacement to cash and bank cards, it is starting to go beyond
I go for months without having any cash or bank cards on me. Unfortunately everything falls apart when my phone runs out of battery.
Ever since I could tap to pay with my card in AU, I have been going months without using cash. I usually still have money, but never use it. I've gone almost 2 months with literally 0 dollars in my wallet.
With digital wallets, there's zero need for credit cards and their predatory interest rates.
China is just absolutely crushing it. The Amazon Self Serve store that's still in testing in USA? Tao Bao pushed their version and it went live last week.
How is there zero need? If don't need to borrow money longer than 30 days, you pay zero interest. If you do need a bit longer to pay, you have that option.
People paying in cash is a small minority
Speeding up lines, they also can have more clients for less cashiers
In France, most people pay with a bank card, the rest with cash. The process is longer and less user friendly
Also 20€ limit is fairly deal breaker, doing groceries will often be above that. Even a 2 person MacDonalds is probably something like 22€
Meanwhile even vending machines can scan your QR code in China
Edit: just wanted to add that many vending machines also do support NFC payments.
The article mentions that not everyone has access to it though, if you just sign up why is that (they don't want it or something else)?
And what about privacy? Obviously everything you buy is being fed into a big government database somewhere. Do people in China not care about that (has privacy been eroded so much)?
I don't see how it's different from using credit cards or any other digital payment method.
People who don't want to get a Google account already get a degraded product when using Android phones, and I'm not even sure an iPhone works without an Apple ID. That Google Wallet flopped is just a happy coincidence in this regard, but Apple Pay so far hasn't, and then we have the same situation there as with e.g. Alibaba.
Some nations like Switzerland at least have a unified national mobile payment platform (Twint in this case) carried by an alliance of banks. This doesn't put all the power with just one or two privately owned US or Chinese companies, and it brings banking regulations into the game. Maybe that approach should be copied, but it only works in countries that have those regulations and banks willing to cooperate.
I am one of the folk in the inevitability of cryptocurrency camp (not btc or any existant coin, though) but that world is one where it becomes very easy to correlate wallets, or at least where the funds come from, with the person making the purchases.
For everyone who wants anonymity they can keep using bitcoin and gold after fiat paper and coins are gone.
If you believe that, you're going to be shocked when the vast majority of people switch to cashless systems, and cash will only be used for criminal activity, and then cash will become criminalized.
The solution isn't to preserve cash. That's doomed to failure.
It won't happen if enough people fight it. You should value privacy and have a healthy distrust of both banks and governments.
Here are the heartening results of an EU survey conducted earlier this year about restricting payments in cash. In short, 94.9% of respondents oppose restrictions on cash payments. 86.9% believe that paying anonymously is an essential personal freedom. That's the spirit.
There is no regulatory tracking of bank note number to who withdraws it. None. An incredible and incredibly pointless mess. ATMs do read them however,for the just-in-case scenario.
In bank robbery stories, sure "A million in used notes" sounds nice, but that's because a net would have been thrown down, or specific attention drawn to a serial, but in most cases, no. The regulatory burden would be far too surreal.
That's probably more traction than Google Pay or Apple's payment system ever got.
"Alipay, leader in online payments. 400,000,000 Users."
I knew quite a few places in Vancouver where people were ready to accept payment by zhifubao id, but nobody had qr scanners or anything. It may end up like Paypal local - come to shop that accepts paypal, ask if they support it, and yeah "transfer money to id 4746474, call me back when you are done"
When I heard about it several years ago, it was, effectively, the largest bank in Kenya.
In practice, scanning and paying is much faster than shown in the video. He is using an old phone, on a newer one scanning the barcode takes around 0.5 second and the verification takes 2-5 seconds (not 15 seconds as shown in video).
Paying in stores works differently. The WeChat app has a wallet section with your personal payment QR code (which changes every time you open the app). To pay in a store, let the clerk scan it like this https://wx.gtimg.com/pay/img/wechatpay/intro_2_1.png then enter your six digit payment passcode (optionally, you can scan your fingerprint). After entering your passcode, it takes around 5 seconds to process and verify. You get a receipt as a WeChat message (last screen shown here https://www.royalpay.com.au/resources/images/retail-example.... ).
Many stores (usually restaurants) have a nearby QR code you can scan to follow the business's WeChat "Official Account". Follow this account to earn loyalty points, discounts, and freebies whenever you pay with WeChat wallet at this business in the future. The business can send you chat messages about promotions too (you can mute them if you like). This feature ties in really well with WeChat pay.
There are other uses of WeChat Wallet too, most of which are shown in this promo video:
At timestamp 0:09, that sign/sticker signifies this store accepts WeChat Pay
At timestamp 0:24, watch the clerk scan the customer's barcode
At timestamp 0:30, the customers scans the store's payment QR code and types in the amount they want to pay. More at 0:50
At timestamp 0:38, this store has a dedicated QR code scanner
At timestamp 0:50, it's the same as 0:30 where the customer types in how much they are paying. Paying like this is common at street stalls.
At timestamp 1:00, two friends use WeChat Wallet to transfer money to each other
Opening WeChat wallet on your phone is very easy. On iPhone just force touch the WeChat app and a quick menu for the QR code scanner and WeChat Wallet appears. In my opinion, it's much faster and more convenient than paying with credit card.
To me, the mode where the store scans your temporary payment QR code (like in McDonald's) feels like signature-less swiping in Starbucks in the US. You can't confirm the amount beforehand in either case. But the WeChat way seems more secure, as no one can clone my temporary QR code.
What really impress me is that Alipay immediately responded to such reports and agreed to foot the damages. They also started to promote the voice notification feature so street vendors don't have to stop periodically to just check whether they are actually getting paid.
You will never ever see Chinese big four state owned banks take good care of their customers/users to such extent. It is definitely a good example on why capitalism is the best choice in 2017.
Until the company becomes too big, and can do whatever they want without losing customers. See various horror stories about Bank of America, Comcast, PayPal, management engines in Intel and AMD chips, 'telemetry' in Windows, etc., for counterexamples.
From that aspect, there are tons to learn from what happened in America.
But reduced security doesn't sound like a very good idea.
Fundamentally, a wechat/alipay transaction is traceable. Traceability is great for expense reports, but a non-starter if you're a drug dealer -- especially with China's draconian drug laws.
Even if you were to launder the money through fronts or a series of transactions, a state level actor (i.e, China) would have no real difficulty in tracking down such activity. With cash, this becomes much, much harder in cost, time and manpower. Not impossible for a state, but certainly an effective deterrent from casual or low level investigation.
This difference in traceability will keep cash and other compact tangible mediums of value (precious gems and metals, ivory, drugs, etc) in use by subsets of the population for as long as people value the relative anonymity and are willing to put up with the costs and risks a physical medium entails.
It would lead to behavior of withdrawing money at an ATM then spending it to disassociate it from yourself by getting change. What if they build in scanning to cash registers though? Seems relatively simple to track cash if there was any will to do so.
I wouldn't say never. It can be marginalized to the point that it becomes annoying for vendors to rely on it and all you need is a little bit of regulatory push to stop cash. By then, most shoppers would not care enough to protest.
As for drug dealers... what can I say... i don't think their needs will be taken into account and as far as I know, bitcoin is already working for them in that regard.
CurrentctC never made it out of test marketing and I don't think Walmart Pay is taking off.
The difference is that these two are from big retailers and the Chinese versions are from apps or online retailers.
However, I realize that column is almost 50 months old. At the time it was part of a worry, because it was very difficult for anyone to understand what was going on in the Chinese economy and therefore which economic policies would be harmful. (Eg. stimulus during bubble, or tightening during stress)
Has cash really become a lot less popular in the past few years?
I use Alipay or WeChat for pretty much anything: groceries, bills, plane tickets, hotels, rent...
I actually have to use LastPass to remember the codes of my debit/credit cards.
Even traveling to Hong Kong feels backward; you have to go to an ATM, get money and then struggle with change in your pockets for the rest of the week.
I really hope this trend goes global and helps create a more competitive space for banks; it would be good to see them trying to innovate a bit.
And while it's hard to connect your Wechat account to your bank account as a foreigner, it's like everything in China: If you have Guanxi it's no big deal. You just give cash or bank transfers to your friends and they send you Wechat money.
Anecdote: I tried to pay with Alipay in a Uniqlo store on my last trip to Japan. The payment failed, so I paid by card instead. A minute later I received an SMS from Alipay telling me it was because international payments are only available to Chinese ID card holders.
It's only as useful as the payment sourcs, and us credit/debit cards are terrible. I don't see how qr codes could do a lick of good.
Difference for consumers is minimal. Cards can be faster to use.
I think no banker in sane mind will issue a credit to an average Russian
No national putdowns on HN, please.
We detached this subthread from https://news.ycombinator.com/item?id=14785516 and marked it off-topic.
In absolute terms the average Chinese person can't afford higher quality items.
We detached this subthread from https://news.ycombinator.com/item?id=14785358 and marked it off-topic.
Say I make a charger and want people to think it's high quality. To do this, I spend 90% of effort on making it look exactly like an Apple charger. It even works, kind of, maybe once.
This is a straight up scam, and the kind of crap that people knock China for. And such behavior is pervasive with the Chinese govt largely looking the other way. I'm fine with China competing but their government needs to stop the rampant scams. It hurts the more successful Chinese brands just as much.
It would also, then, be the US' right to negotiate trade agreements knowing that.
The Chinese government does some fucked up shit, but not being under the foot of US global intellectual imperialism is not them being the villains, its the US for trying to force a global framework of IP, and especially US' idea of permanent copyright, on everyone else.
This also has nothing to do with the US and everything to do with China. China counterfeits everyone's shit not just one country, but I appreciate how incredibly biased you are against the United States. I didn't even mention the US in my original post so I have no idea where you got that tirade. Copy pasted from your favorite Chinese government mouthpiece maybe?
The US can't inspect every piece of mail to find counterfeits, they need to be traced to the source, which China is unwilling to do.
For a long time only citizens of the United States could be protected under copyright law; it was legal to copy work by foreigners.