COVID-19 has had a devastating impact on the world we live in, and as we reflect on the pandemic’s catastrophic effects on human life, the profound and long-lasting changes it will bring to economies and industries are also coming into sharper focus.
One area where we can expect accelerated transformation is in the field of payments, and more broadly, financial services, as social-distancing measures become a part of daily life. In Europe for example, payment habits have changed to become more digital due to COVID-19 and these changes are likely to be permanent.
Transactions with mobile wallets in Europe doubled to 14% in the first three months of 2020 compared to 2019, and about three-quarters of Europeans surveyed don’t plan to give up their ‘contactless’ usage even after the pandemic, a recent survey showed. In China, where digital payments were ubiquitous long before the outbreak, e-wallets such as Alipay are becoming a greater part of users’ digital lifestyle.
I believe the key to the successful adoption of mobile payments and a digital lifestyle lies in smart applications of technology – be it artificial intelligence, blockchain, or even the humble QR code. Technology can both improve an existing service or extend that service. Improvements can make the payment process faster, easier, and safer.
In a January report, Harvard Business Review described how AI-powered software helped companies such as Ant Group expand its services beyond payments.
These developments included SME lending, money market funds, health insurance, and even an online program called Alipay Ant Forest that encourages people to reduce their carbon footprint.
‘Zero contact’ loans
Amid the coronavirus outbreak in China, we also introduced a series of technology-powered initiatives through the Alipay platform, to help small businesses and individuals who were among the worst-hit.
One example was ‘zero contact’ loans which MYbank, an online private commercial bank under Ant Group, launched in partnership with 100 Chinese banks to support 10 million SMEs, individual businesses, and farmers across China. These AI-powered loans take three minutes to apply for on a mobile phone, approvals can be given within one second, and the process can be completed with zero manual intervention (hence the ‘310’ name for Alipay’s lending model).
In February, Alipay’s online mutual aid platform Xiang Hu Bao, which provides health pay-outs for 100 types of critical illness, added COVID-19 to its coverage and used blockchain technology to speed up payments while preventing fraud.
Other innovations included digital coupons, issued through the Alipay app to help boost consumption as more businesses emerge from the shutdown; as well as job seekers’ mini-programs, which are like mini-apps within the Alipay app through which those who have lost employment due to the pandemic can search for part-time jobs.
Understanding consumer preferences
How are these developments relevant for those of us in Europe? In the midst of the COVID-19 lockdown in Europe this May, I joined an online panel, where we discussed how the pandemic is changing the global payments landscape and how that will affect the future of financial services in Europe.
The panel moderator, author and fintech blogger Chris Skinner, had also conducted a study on the topic, which concluded that Europe’s payments market is still a fragmented one, providing significant potential for innovation and development.
This means that companies need to be innovative in their solutions, make sure they understand the preferences of European consumers, create products that best suit their needs, and, as mentioned above, make sure that they either improve the existing process or extend the services available.
That understanding of local users’ needs is one of the reasons why Alipay’s core strategy has been to work with local partners wherever we operate. In Europe, we have been working with local payment providers to serve consumers since 2012, including partnerships with Adyen and Klarna to provide payment solutions through the ecommerce platform AliExpress.
This year, we also launched the Alipay Europe service as one of the payment options available on AliExpress, to further enhance the user experience when shopping online.
Partnering in Europe
In June 2019, we also started working with six payment partners, including Bluecode and Vipps, to develop a compatible and interoperable QR-code format for users of these European e-wallets – estimated at five million people.
Separately, Alipay has been working with local partners to connect European merchants with Chinese tourists to enable seamless payment experiences, as well as helping merchants increase sales. Among the first was in Finland, where we partnered with local payment provider ePassi and the country’s national tourism board Visit Finland, in 2018, to enable local merchants to accept mobile payments.
While global travel has been badly impacted by the outbreak, hopefully, demand will eventually return – and Europe remains one of the most attractive destinations for global travellers, especially those from Asia. After all, in past crises, tourism remained resilient and quickly recovered, according to the World Tourism Organization of the United Nations.
For this reason, it is likely that businesses in Europe will soon reopen and welcome global visitors again. Responsible technology companies can play an important part in that recovery, by introducing innovative payments and other digital services, bringing a better experience to consumers, as well as the merchants and SMEs that serve them.
This article was published in our Payments Methods Report 2020, an extensive overview of what’s new in how people pay in the most relevant ecommerce markets.
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