Why Mobile Payment Isn't Popular in Developed Countries: Zhou Xiaochuan's Insight

Why Mobile Payment Isn't Popular in Developed Countries: Zhou Xiaochuan's InsightIn China, mobile payment has become an indispensable part of daily life. From street vendors to large shopping malls, mobile scanning payment is ubiquitous, and cash payments have gradually faded from view

Why Mobile Payment Isn't Popular in Developed Countries: Zhou Xiaochuan's Insight

In China, mobile payment has become an indispensable part of daily life. From street vendors to large shopping malls, mobile scanning payment is ubiquitous, and cash payments have gradually faded from view. Although the government stipulates that merchants cannot refuse cash, the prevalence of scanning payments means many merchants can't even make change. However, this payment method, commonplace in China, is rarely seen in many developed countries. Why haven't developed nations, with their advanced economies and technology, embraced mobile scanning payments? The views of Zhou Xiaochuan, former governor of the People's Bank of China, offer some insight.

I. Vast Differences in East-West Payment Habits

The prevalence of mobile payment in China and its relative obscurity in developed countries has sparked much discussion. Some attribute this to differing payment habits. Before the rise of mobile payment, developed Western nations had already established comprehensive credit card payment systems. Credit card payments are convenient and offer rewards points, redeemable for goods or services, fostering strong consumer dependence. Switching to mobile payment might mean losing these benefits, leading consumers to stick with credit cards and cash. This entrenched system, even with government encouragement of mobile payment, is difficult to change.

In contrast, China experienced rapid mobile payment adoption alongside its booming mobile internet. Before mobile payment, cash dominated, with relatively low credit card usage. Many small and medium-sized businesses lacked credit card processing equipment. As a result, Chinese consumers were less familiar with credit cards, even finding them cumbersome. Mobile payment, conversely, is simple and intuitive; whether customers scan the merchant's code or merchants scan the customer's code, the process is straightforward. Even the elderly can quickly learn to use it after brief instruction. Getting the elderly to understand and use credit cards, on the other hand, is far more challenging.

This difference in payment habits facilitated the rapid adoption of mobile scanning payments in China, with its convenience leading most to abandon cash. In contrast, Western countries, already accustomed to the convenience of credit cards, see no need for mobile scanning payment.

II. Different Perceptions of Privacy Protection

Western countries place a high value on personal privacy, with governments enacting strict regulations to protect citizens' privacy rights. For example, the European Union's General Data Protection Regulation (GDPR) imposes strict limitations on how companies handle user data. Apple's focus on user privacy has also garnered global acclaim; Apple phones automatically generate complex passwords and encrypt photos to ensure user privacy.

Credit card payments are perceived as more secure than mobile payments in terms of privacy. Using mobile payment tools like Alipay or WeChat exposes sensitive information such as spending habits and transaction records to the platforms for collection and analysis. While these platforms employ various measures to protect data security, some developed-country residents remain concerned about potential privacy violations from data collection.

III. Different Concerns Regarding Financial Security

Although China's mobile payment technology is quite mature and secure, in some developed countries, the security risks of mobile payment remain due to factors such as mobile phone penetration rates and network infrastructure. Cyberattacks and online fraud are frequent occurrences, eroding consumer trust. Credit card payment systems, in comparison, are relatively mature and secure. Furthermore, credit card use is linked to personal credit, with late payments impacting credit scores, providing an additional layer of financial security. Developed-country residents thus prefer credit card payments.

In China, the public is less concerned about the security of mobile payments, due largely to the government's strict financial regulations and public trust in the government.

IV. Gap in Infrastructure Development

China has been at the forefront of infrastructure development, particularly in communication networks. From 2G to 5G, China's network upgrades have been remarkably fast, with high coverage. Nearly every inhabited area has 4G connectivity, providing a solid foundation for mobile payment promotion. A robust network environment is crucial for smooth mobile payment transactions; network lag or delays negatively impact the user experience.

By contrast, some developed Western countries have lagged in communication network development, with slower speeds and lower coverage than China, lacking the hardware foundation for promoting mobile scanning payments. Credit card payments, however, are unaffected by network conditions, functioning as long as the merchant has the necessary equipment.

V. Zhou Xiaochuan's Insightful Observations

Regarding the lack of mobile scanning payment popularity in developed countries, Zhou Xiaochuan noted that China's success wasn't due to the absence of credit card systems but rather stemmed from advantages in areas like communication network development.

However, beyond technical and infrastructural factors, negative Western media portrayals of China have also influenced public perception. Some Westerners wrongly believe the prevalence of mobile payment in China stems from rampant counterfeit currency, rather than advancements in communication networks. This bias hinders objective understanding of China's mobile payment technology.

Conclusion

The prevalence of mobile payment in China and its lagging adoption in developed countries is a result of multiple interacting factors. These include objective factors like communication network development, and subjective factors such as payment habits, privacy protection awareness, concerns about financial security, and negative Western media coverage. Currently, there's no definitive answer on which payment method mobile payment or credit card payment is superior or will become the future mainstream.

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