merchants pay to accept cards and mobile payments-about $90 billion a year, according to the Nilson Report, an industry newsletter. Perhaps the clearest opportunity lies in siphoning off some of the fees that U.S. What follows is a breakdown of what that could look like-theoretically-using the explosive growth as China’s apps as a rough guide. The stakes are enormous, potentially carving away billions of dollars in annual revenue from major banks and other firms. or Facebook Inc.-replicates the success of Alipay and WeChat in America. financial industry is that a technology company-whether from China or a homegrown juggernaut such as Inc. “Everyone wants to be the place that is the one place you go to do that.” “This is going to be the battle of all time-like who dominates all those services-and it’s still not known,” Jamie Dimon, chief executive officer of JPMorgan Chase & Co., told his company’s investors in February. Instead, everyone is trying to replicate their success. commands the kind of clout that Alipay and WeChat wield back home. Transaction Breakdownįor now, no company in the U.S. system siphons off enormous amounts of money. From the perspective of merchants, too much of the U.S. Connected to that is a universe of wallets and payments systems operated by the likes of PayPal Holdings Inc., Apple Inc. consumers still rely on banks for most non-cash payments-whether it’s by check, debit, credit or a growing number of other payment systems tied to their bank accounts. Consumers sent more than $2.9 trillion inside the two systems in 2016, equivalent to about half of all consumer goods sold in China, according to the payments consultancy Aite Group. Tencent Holdings Ltd., similarly, debuted its payments function in 2005 in a bid to keep users inside its messaging system longer.Īlipay and WeChat have since swelled in popularity, boasting 520 million and 1 billion monthly active users, respectively. created Alipay in 2004 to let millions of potential customers who lacked credit and debit cards shop on its vast online marketplace.
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