Building a digital wallet for the future with Huawei Pay

Unlocking cutting edge payments

In China, over 850 million people use mobile payments, on average three times per day, 85% of which are via QR codes. With mobile payments deeply penetrating Chinese consumers’ daily lives both choice and flexibility are vital. Whilst these demands are not unique to China, the rate of mobile payment penetration for in-store payments in China is around double that of the UK and the US, providing fertile ground for innovation.

Huawei sees payments as part of a broader, integrated experience where rich financial applications and innovations are built around the payment itself. A payment is ultimately only the result of a buying decision, but how that process is embedded into the merchants and customers’ value chain is how the next generation of payments will be unlocked.

Huawei Pay launched in China in 2018 supporting both QR code and NFC. Huawei’s philosophy is to enable convenience and preference, the two strongest deciding factors when selecting a payment method. Through partnerships with UnionPay and issuing banks, Huawei Pay is now accepted at more than 16 million contactless POS terminals.

The QR code revolution in China has been pervasive. In bakeries and fruit shops, there are no longer queues to checkout. In restaurants, a quick scan of the QR code on the table, allows customers to order and pay for a coffee in less than a minute. Waiters may forget you don’t want sugar, but the system doesn’t. The humble QR code has embedded itself into daily life by making the transaction ‘quiet’ but ‘intelligent’.

QR codes are not just reserved for in-store transactions – websites in China also include a QR code payment option. A smartphone camera, payment app, and fingerprint verification is all that is required. There is no need to enter card details, thus improving checkout speed.

Despite the rise in QR codes, NFC is popular in some scenarios, particularly for transit – by digitising the transit card, it allows easy use and quick top-up services.

Standardisation – a pillar for payments innovation

Whilst payments is a competitive market, the role of standards and industrial collaboration should not be overlooked. Standardisation and innovation are not often considered partners, but organisations can innovate faster when a level playing field and best practices are in place.

The drive towards Central Bank Digital Currencies (CBDC) in many markets will involve new standards and regulatory frameworks. In partnership with the Peoples’ Bank of China, Huawei is actively progressing best practice for China’s CBDC (DCEP). The Huawei Mate 40 smartphones feature a built-in wallet with hardware-level security, controllable anonymous protection, and the ability for payer and receiver to make offline transactions. In areas with poor network, coverage transactions can be made via NFC by simply tapping each other’s phones.

Whilst there cannot be a like-for-like implementation between China and other markets, with the ongoing development of other global CBDC initiatives, Huawei can bring its experience on how this new technology can deliver the needs of consumers, industry, and regulators.

OEMs as a partner for financial services

As the payments industry catapults towards the intersection between security and user experience, Original Equipment Manufacturers (OEMs) can play a role in supporting the financial services industry in developing digital-first solutions that befit the 21st century.

As more players enter the payments value chain, trust and confidence are of paramount importance. Combining software and hardware-backed security is an important consideration when building modern digital solutions. As the industry develops CBDCs, interoperable digital IDs and enhanced biometrics, the security of these assets will need to be watertight. The Trusted Execution Environment of the device provides higher levels of trust and access control for assets stored in this space, when compared to more general purpose software environments. OEMs can help the payments industry navigate this space.

Additionally, customers are beginning to embrace wearables and the broader IoT market to perform payments. OEMs can work with the payments industry to develop best-of-breed digital solutions, next-generation authentication, and value-added services. Innovations such as a keyless future are becoming reality. Payment use cases for hotel check-in/out, car rental services, and lockbox pay on collection will be exciting ones to watch.

Digital wallets for the future

New technology enables digital wallets to modernise at a faster pace than their physical counterparts. Cryptocurrency, Buy Now, Pay Later, or hyper-personalisation are much easier to achieve on digital wallets.

However, markets such as Europe are highly developed with a plethora of localised wallets. Huawei is working together with local providers, to bring the services our shared customers know and love. Through local cooperation with Bluecode in Germany and Austria, BANCOMAT S.p.A. in Italy and Zapper in South Africa, Huawei Pay has enabled payment solutions beyond APAC.

During the pandemic, digital payments uptake has increased at a faster pace than forecast. However, as we move into a digital-first world, pushing the boundaries of technology to create scalable, widely adopted solutions are becoming more of a challenge. Supporting a seamless but integrated payments experience is the route to success and it is no longer the sole responsibility of the financial services industry – through collaboration, great rewards can be reaped.

This article is part of the Payment Methods Report 2021 – Latest Trends in Payment Preferences, a comprehensive overview of the payment methods in scope for 2021, as well as best practices for checkout optimisation and customer conversion by addressing digital transformation, security, and localisation.

About Chuanyong Ma

Ma is currently responsible for Payments, Maps, and AI businesses’ strategic design, product development, and market operations. He graduated in computer science and technology, and has a career spanning 17 years at Huawei, with responsibilities covering consumer devices, software, and digital services.

About Huawei

Huawei is a leading provider of information communications technology (ICT) infrastructure and smart devices. We are committed to bringing digital to every person, home, and organisation for a fully connected intelligent world with the hope of making dreams come true. Huawei Consumer BG covers smartphones, laptops, and wearables, mobile services including Cloud, AppGallery, Payments, and more.