Ideal Cost Reacts: MarketWatch’s “Credit cards have gone out of style in China – will the U.S. be far behind?”
In this article, there is no disclosure for affiliate compensation for third-party advertisers, and there don’t appear to be any credit card processors actually advertising with links in the article. The author instead poses the questions of whether or not credit cards will even be relevant in the near future while promoting two Chinese-owned social media payment applications. Let’s see how the author’s predictions hold up.
Social Media Payments
“Imagine opening Instagram not to post a photo or comment on someone’s story, but instead to pay for your groceries.
That’s what more than 1 billion people in China do.
Except instead of using Instagram, Twitter, or other popular social media outlets in the U.S., they open up WeChatPay and Alipay to scan QR codes to pay for goods in place of a traditional checkout.
WeChatPay, akin to Facebook Messenger, was developed by Tencent, the Chinese equivalent of Facebook. AliPay was developed by Alibaba, the Chinese equivalent of Amazon. Together these two platforms account for $41 trillion in transactions annually.
Their exploding popularity has saved Chinese merchants nearly 2% of gross revenue that otherwise would have gone to paying credit-card processing fees. On top of which, many retailers have stopped accepting credit cards as a form of payment.”
The premise is certainly interesting. Facebook already has Facebook Pay. Still, it is marketed more like a Peer to peer payments or P2P transaction app for family and friends to send money rather than for B2C commerce. Some commerce takes place on Facebook, but it is typically between individual Facebook members rather than purchases from businesses. With a click of a button, Facebook could change its model.
The most logical integration for Social Media and Payments is through Twitter and Square Payments. Jack Dorsey is CEO of both Twitter and Square Payments.
As to retailers stopping the acceptance of credit cards, the author doesn’t mention if social media payment apps would integrate with credit card companies. The author implies that the credit card market in the U.S. could cease to exist like China. Consumer credit card debt in the U.S. surpassed $1 trillion earlier this year: so we aren’t sure that the credit card companies would be willing to give up their market without fighting tooth and nail to save it.
Furthermore, if the credit card companies cease to exist, who holds the credit for these payments? Social media sites?
Will U.S. Customers Integrate with Chinese-Owned Payment Apps?
“On the contrary, Brian Riley, director of credit advisory service at Mercator Advisory Group, believes that U.S. consumers will eventually hop on the Alipay or WeChatPay train.
“Alipay already has a toehold in North America with Tmall,” a smaller-scale version of Amazon, he said. “WePayChat has some privacy concerns in the Asian market, which do not play well in the U.S.”
In addition to China, Alipay has also gained a lot of traction in Latin America, he said.
“It is hard for them to concurrently move into the U.S. market and face strong competitors such as Chase, Amazon, and PayPal,” Riley said, adding that “with the U.S.-China tariff issues, timing is not right.”
We can’t even take this passage seriously. This appears to be complete propaganda geared towards persuading American consumers to adopt privacy-violating payment apps originating from a country alleged to have many privacy issues. What could go wrong with entrusting payments security to these apps?
Worse than other articles that mislead or omit their affiliate relationship with the payments industry, this article seeks to persuade consumers to trust certain international apps. Which think tank funded this article?
Additionally, the article provides virtually no analysis of the current landscape of social payment apps. Is that by design?
We grade this article, F.
Don’t Take On The Credit Card Processors By Yourself
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