New York Times correspondent Paul Mozur wrote an article about settling in mainland China and one of the greatest challenges he encountered was making purchases not because of a language barrier – although when it comes to IT, it could be considered just that – but because of a paymentA transfer of funds which discharges an obligation on the part of a payer vis-à-vis a payee. More barrier. Indeed, mobile payments have expanded so rapidly in Chinese cities that it can sometimes be difficult to use other more traditional payment methods such as paperSee Banknote paper. More or plastic.
Everyone, from the smallest street vendor, to the fancy restaurant or the local rent-a-bike ask whether you prefer to use WeChat or Alipay to settle the bill – and sometimes it might be the only available option. The problem is that in order to use these mobile apps, one must have a Chinese bank account, locking out a growing number of people and businesses from the economy, particularly tourists and foreign companies. In fact, the risk if that the growing grip of these two smartphone payment platforms will increasingly force foreign companies to deal with Alibaba’s financial affiliate, Ant Financial (Alipay), and Tencent (WeChat) to access consumer payments and, conversely, require Chinese companies to build parallel payment systems to sell goods and services abroad via Facebook, Google and major credit card providers.
The mobile payments market has exploded in China reaching $5.5 trillion in 2016. But the explosion of such payments also comes with other risks that go beyond social exclusion and isolation of the Chinese economy from the rest of the world. Both WeChat and Alipay work via a system of QR codes: the consumer simply scans the vendor’s code to make the purchase. Unfortunately, a growing number of scams have been recorded including a significant one earlier this year where $13 million where stolen thanks to fraudulent QR codes.
The scams are either carried out by simply replacing a genuine code with a fraudulent one or by including a virus in the code that steals moneyFrom the Latin word moneta, nickname that was given by Romans to the goddess Juno because there was a minting workshop next to her temple. Money is any item that is generally accepted as payment for goods and services and repayment of debts, such as taxes, in a particular region, country or socio-economic context. Its onset dates back to the origins of humanity and its physical representation has taken on very varied forms until the appearance of metal coins. The banknote, a typical representati... More directly from the user’s mobile wallet.
“Literally every business and brand in China is plugged into this ecosystem” says IDC analyst Shiv Putcha. But, “from a cybersecurity point of view, the QR code […] does not have inherent security flaws but it subject to malicious abuses”, states associate professor and director of the Cybersecurity Lab at Hong Kong University, Charles Zhang. Indeed, the QR is “essentially a link that can be used to infect smartphones” (Techinasia.com). The problem is that the QR code’s cryptic technology makes consumers overly confident about its security and that could be a difficult issue to manage in an economy that is overly reliant on a limited portfolio of payment methods.