When mobile payments started up in the United States, one of the biggest concerns, especially as noted by banks, is that mobile payments would not only eat banks’ lunch, but start emptying the pantry and asking to see a wine list. While it hasn’t been this bad in the United States—particularly given how banks started joining in the fray as well—in China, it’s a bigger issue, one that could be a real problem for banks. Reports suggest that Chinese banks’ attempts to get in on mobile payments, even the UnionPay platform, haven’t been all that successful. It’s been so bad, by some reports, that the banks lost $22 billion to Alibaba and Tencent’s platforms just in 2015. Worse, UnionPay represented just 1.8 percent of the mobile payment market in 2015’s third quarter, showing that the banks’ share of the mobile payment market is shockingly slim, and not likely to gain ground. Projections indicate that, by 2020, that number will climb to almost three times its current level, reaching roughly $61 billion that year. The news isn’t all bad, particularly as Apple Pay is starting up in China, and turns to UnionPay for underpinnings. . This is a two-fold problem for Chinese banks. The more users move to mobile payments, the less need they will have for the banks to begin with. If the banks don’t have a significant presence in the next big payment technology—mobile payments—then the need for banks in general collapses under the two-pronged assault of less need for one platform, and little presence in the second platform. That’s bad news on every front. For the banks to recover, they will need a much bigger presence in mobile payments, and will have to put their capital behind it. Incentive programs could be a big swaying force here, especially if the systems are on par with those currently in place. Chinese banks will have to break entrenched users out of current patterns, and that’s a challenge. They may have the capital on hand to make it happen, but the banks will have to move quickly to avoid being swamped altogether. The sooner the better is best for competition, and if the banks fail to move, they run a serious risk of losing a market altogether.
Chinese banks’ reportedly lost $22bn to Alibaba and Tencent's platforms in 2015, with projections for 2020 estimated at $61bn. Meanwhile, UnionPay, the People’s Bank of China (PBOC)-owned mobile payments platform reportedly held just 1.8% of the market in 3Q15, giving cause for concern about how slim China’s total market share has become. The report also highlights that China's e-commerce industry is growing faster than any other country in Asia, but it notes that this growth will be limited by a lack of consumer adoption due to high costs and poor