WASHINGTON June 17, 2019 – In spite of an advanced smartphone-based payments system that is widely adopted in China, panelists at a Brookings Institute event on Monday expressed skepticism that such a system would become popular in the United States.
More and more people in are exclusively using payment platforms such as Alipay and WeChat to conduct digital and physical transactions, said panelists at the event hosted by Aaron Klein, policy director of Brookings’s Center on Regulation and Markets.
Indeed, many Chinese have effectively leapfrogged from being “unbanked” to users of one of the world’s advanced payment system.
Transactions conducted on these platforms are often completed by using a “QR,” or quick response, code that is connected to a consumer’s digital wallet. Digital wallets are a way to store payment credentials electronically and to transmit the funds to the other party.
Consumers and merchants can perform transactions by cutting out the middleman of traditional transactions, i.e. the bank.
In some rural parts of China, there are people using this system who don’t even have a bank account, according to Yiping Huang, professor of economics at Peking University’s National School of Development.
“I think what makes it really popular and inclusive is not just the payment system itself but the ecosystem surrounding it,” said Huang. “With just my mobile phone, I can now buy my lunch, my airline tickets, pay my electricity bill, almost everything whether it’s on WeChat or Alipay.”
Seamless as this payment system may be, one of the main concerns panelists addressed was whether the personal information shared over these platforms could be compromised.
“Alipay and WeChat aren’t going to take off in the US.,” said Claudia Biancotti, senior economist in the International Relations and Economics Department at the Bank of Italy.
Because Americans don’t have these digital payment system networks, “they don’t see the appeal of a payment method integrated into a social media that they don’t use,” she said.
Moreover, it would be difficult for the U.S. and Europe to enforce technology regulation and to balance big data analysis and protection of privacy. Multinational companies working with China are very cautious in terms of data protection, said Frank Tuscano, senior manager of Royal Caribbean Cruises, Ltd.
According to Tuscano, creating a contractual agreement between companies is the most challenging part of the digital payment ecosystem.
It is also possible that China’s growing payment system could make an impact on Facebook’s widely-anticipated release of its upcoming crypto-currency. But whether Facebook transactions will attempt to disintermediate financial institutions is uncertain, given how predominantly bank-centric is the U.S.
- CEO Greg Mesch Recounts How CityFibre, UK’s Third Major Telecom Provider, Grew With Wholesale Network
- Coronavirus Pandemic Renders Small Businesses More Reliant on Digital E-Commerce Platforms Than Ever Before
- Breakfast Media Minute: September 22, 2020
- Mobile Technology Aided the Growth of Black Lives Matter, But Will Hashtag Outrage Lead to Change?
- TikTok Ban Delayed as Wal-Mart Enters, FCC Says California Not Prepared for Auction, Wireless Facilities in Rights-of-Way
Signup for Broadband Breakfast
Fiber4 months ago
Fiber Networks Hold a Cybersecurity Advantage Over Rival Co-Axial and Wireless Technologies, Say Panelists
Congress4 months ago
Senators Introduce Healthcare Broadband Bill as House Companion, Proposes $2 Billion Telehealth Expansion
Artificial Intelligence3 months ago
Brookings Panelists Emphasize Importance of Addressing Biases in Artificial Intelligence Technology
China5 months ago
China Expert Predicts that Nation’s Flawed Coronavirus Response Will Damage the Power of Chinese Communist Party
Infrastructure6 months ago
Broadband Breakfast Live Online Will Stream Every Wednesday at 12 Noon ET on ‘Broadband and the Coronavirus’
Education6 months ago
Online Elementary Education is No Spring Break for Parents Teaching from Home
Artificial Intelligence3 months ago
U.S. State Department Employing Artificial Intelligence Against COVID-19 Misinformation
Rural5 months ago
Why the Rural Digital Opportunity Fund is So Significant, and How to Succeed in Applying For RDOF