Beginning in October, Alipay will begin assessing a withdrawal fee to users who transfer funds beyond a certain amount back to their bank accounts, according to CRI English.
Alipay users will get a withdrawal “quota” worth 20,000 yuan ($2,993) for which cash-outs are free. After that, customers will be assessed 0.1% of the withdrawal amount. While Alipay has a large audience — the wallet held over half of China’s nonbank mobile payments market in Q3 2015 — the firm believes that the new cap will have a “limited” impact on users, according to CRI.
For context, WeChat Pay, Alipay’s main competitor in China, introduced a similar fee earlier this year, but with a cap set at 1,000 yuan ($150), a much lower total. That makes sense, since Alipay is more popular for high-value purchases, like bill payments, whereas WeChat is mostly used for P2P. That means it’s likely that Alipay users tend to keep larger amounts in their accounts, and would be cashing out a higher amount on average across the board.
The move could help keep users loyal to Alipay as bank-based competition in China heats up. The wallet had previously resisted such a fee, likely to pose an advantage over WeChat. But now, it’s introduced one, likely because such a fee could help keep users loyal. When WeChat introduced its fee, an iResearch analyst told the Financial Times that the cost could encourage users to keep money inside their wallet, which could drive up overall activity because funds would be more readily available.
And by discouraging users from paying via third party, Alipay could also be taking steps to keep users loyal as China opens its credit card ecosystem and more bank-based mobile payment options, like UnionPay QuickPass and Apple Pay, move into the country.
Mobile payments are becoming more popular, but they still face some high barriers, such as consumers’ continued loyalty to traditional payment methods and fragmented acceptance among merchants. But as loyalty programs are integrated and more consumers rely on their mobile wallets for other features like in-app payments, adoption and usage will surge over the next few years.
Evan Bakker, research analyst for BI Intelligence, Business Insider’s premium research service, has compiled a detailed report on mobile payments that forecasts the growth of in-store mobile payments in the U.S., analyzes the performance of major mobile wallets like Apple Pay, Android Pay, and Samsung Pay, and addresses the barriers holding mobile payments back as well as the benefits that will propel adoption.
Here are some key takeaways from the report:
- In our latest US in-store mobile payments forecast, we find that volume will reach $75 billion this year. We expect volume to pick up significantly by 2020, reaching $503 billion. This reflects a compound annual growth rate (CAGR) of 80% between 2015 and 2020.
- Consumer interest is the primary barrier to mobile payments adoption. Surveys indicate that the issue is less the mobile wallet itself and more that people remain loyal to traditional payment methods and show little enthusiasm for picking up new habits.
- Integrated loyalty programs and other add-on features will be key to mobile wallets taking off. Consumers are showing interest in wallets with integrated loyalty programs. Other potential add-ons, like in-app, in-browser, and P2P payments, will also start fueling adoption. This strategy has been proved successful in China with platforms like WeChat and Alipay.
In full, the report:
- Forecasts the growth of US in-store mobile payments volume and users through 2020.
- Measures mobile wallet user engagement by forecasting mobile payments’ share of their annual retail spending.
- Reviews the performance of major mobile wallets like Apple Pay and Samsung Pay.
- Addresses the key barriers that are preventing mobile in-store payments from taking off.
- Identifies the growth drivers that will ultimately carve a path for mainstream adoption.
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