The Digital Consumer Era

The new digital money revolution is happening in China today. Fan (who is my interview user in Boston) uses the Alipay App to transfer money to pay her tuition fee from China to the US. She also teaches her mom to use this App to pay utility fee at home instead of going to the department to pay for it in person. Fan does not like to carry a wallet with lots of cards for now. She can pay everything by Alipay, such as the bills from Didi (same function App like Uber). Fan did not deliberately change her payment habits, what she thinks is Alipay makes everything convenient.

How did digital payment service fight against the original consumer behavior? Because of traditional thinking, Chinese people use cash almost 95 times for every 100 transactions. They do not wish to spend more than what they have.Nobel Prize winner Douglass C. North argue that ancient Chinese market transactions preferred "personal exchange," like face to face. It is mistrust caused by the lack of contractual intent that shapes this traditional Chinese behavior. That is the reason why the ancient Chinese currency was mainly made of the objects, such as metal coinage, real gold, and flatware. Until to the Tang (618-907) and Sung (960-1279) Dynasties, the accounting currency began to exist widely in Chinese society. Moreover, even to the present, the currency of the accounts (money in a bank account) has turned the principal form of money in China. The characteristic of Chinese monetary system was always mainly in coins through its whole history. This situation is rare in other nations. Thus, the ancient coins can be used beyond time limits. For example, five baht money in the Han Dynasty(206 BC-220 AD) also circulated in the late Qing Dynasty(1644-1912).

Adam Smith argues that Money has two functions, one for debt, one for shopping. This sentence is quite simple, but it tells the effect of social currency meaning. Everyone needs money and money have a different way to utilize.

China is experiencing an explosion of tech-driven finance businesses – fintechs.Digital payments market in China is still booming. The role of mobile payment applications is becoming more and more important. It is the fundamental aspect of all business activities. Users who work and live online would like to spend money on digital service. Convenience is one of the reasons that can explain why the number of digital payment users is more significant than that of other Internet users. Because payment is one of the primary ways that Internet financial business can make a profit from. People could create a variety of new business models based on digital payment.

In the era of mobile payment, cell phone, an actual medium, is the most natural form of platform. Because the number of users relying on using a mobile application and smartphones is gradually increasing.

On the other hand, the development of cell phones affected people. As the e-commerce industry continues to boom, the online payments space follows developed the industry. There is a large market for mobile payments solutions to flourish, with a population of almost 593.57 million mobile users in China. The mobile payments market is dominated by two tech giants – Alibaba’s Alipay and Tencent’s WeChat pay today. Both of them are popular options amongst Chinese consumers, with 49.2% and 20% market share respectively.

China's Internet finance originated in digital payment. It stems from the different area comparing to the traditional financial system of China's business service. As conventional thinking, the core of commercial industry is credit and advanced technology. All the data of fund need financial technology to ease. Thus payment for general business naturally left out.

User-friendly is the key to the success of digital payments on the Internet. It uses a superior user experience to attract users to pay. At the same time, application of significant data soared with user transaction data. Today, payment has become an indispensable part of the development process of the industry.

In the field of payment, Alipay and WechatPay are lucky. This situation inspired Chinese Internet circle and launched a vigorous "plagiarism" tide. In fact, loan service is very challenging for the internet industry. As the result of band advantage for Alipay, WechatPay and even to JingdongPay, it is hard to catch up for the latecomers. So helping enterprises to will not break peer competition. Infiltration of new areas is the key.

Digital money led to revolution. Traditionally, Chinese people thought banks were always related to money. However, the definition of banks in Chinese traditional culture does not precisely coincide with the general concept. The bank in China is the most direct and most significant way for finance business to contact with people. Moreover, at that point, banks are omnipotent."Alipay debuted as a simple e-payment system, but it is straight from a destination app (and website) in its right." To facilitate online shopping, Alipay has established a range of financial services available to people recently, with its massive built-in user base. The primary users lacked easy access to tools for making digital payments, specifically the small business loans.

No matter from which degree of view, the Ants Financial Service is the Internet financial industry leader. Its significance has undergone a qualitative alteration. As a national level application, Alipay quickly seizes the payment market.

With the vast quantity of payment data, Ant Financial Service spawned a variety of more far-reaching financial businesses. Alipay's excellent ability of innovation may modify the competition pattern of the whole Internet financial industry. Moreover, it is said that the prosperity of Internet economic is settled by the Ant Financial Service. In 2016, the Internet commercial platform transferred to the concept of financial engineering. The Ant Financial Service does not seem to over-flaunt its leading place in the economic science and technology. However, through the economic development, digital payment service business may need other sorts. It will be helpful to transfer Ant Financial Service's excellent technical research on helping other SME.

the interface of Alipay

the interface of Wechatpay

Data is the core of the network era. Internet was born as the source of the platform for computing resources. However, the essential practice of data resources has been finalized today. Primary system platform brings the side effects of the label. The user platform for formation is fixed awareness. If their needs and set cognitive overlap low, there is a massive risk of business outflow. The currently dominant platform for mutual checks and balances would be the first opportunity. However, this phased industry characteristics, eventually lead all the challenges into the same trending result which is controlling the user's lifetime. Data also conforms to the movement of the whole Internet industry. It intended to penetrate into traditional industries through the network. When the internet financial relies on small concept finance; it is the estimate of economic life. Moreover, not all Internet commercial platforms could make this qualitative change. Because of the considerable financial capacity and development of engineering science, digital payment is the future. Behind extensive daily life resources, data could connect users through taxi, shopping, films, games, entertainment, food delivery and so on.

In another way, WeChat red envelopes attract Chinese attention on grabbing red envelopes. It introduces a new way to distribute money in the digital social platform. In 2014, during the Spring Festival, Alibaba and Tencent offered digital “red envelopes” with cash coupons worth $97 million and $81 million respectively to encourage customers to link their bank accounts to their Alipay or WechatPay accounts. Clearly, for business, it is a chic way to collect users' private information. But it may be curious why they are eager to grab red packets so much?

Because it is a traditional way to celebrate holidays for Chinese. “Red packages are money wrapped in a red paper given to small fries from their parents, grandparents, and others as New Year gifts." They are called "hongbao" in Mandarin and "lai see" in Cantonese. Sending red packets is a well-observed custom at Chinese New Year. It is also a channel for sending well wishes and luck, especially on the important day. Besides, Chinese people love the color red and regard red as the symbol of energy, happiness, and good fortune.

the interface of Red Packet(Hongbao)

How to open Red Packet(Hongbao)

How to grap Red Packet(Hongbao)

“In China, the red parcel is called Yasui Qian, which means 'suppressing ghost money.' Those who obtain a red packet are wished another year negotiate safely and peacefully." WeChatPay creates a social occasion in chat by allowing people to send money in their conversation. It attracts modern people’s attention to use red packets function. They enjoy "received, sent and grab" experience on the digital path. Even more, 15.8% of users send more than 50 wechat red packet per day.

The traditional banking industry changed service to survive in digital payment revolution. This straightforward and crude understanding marks the maturation of the Internet. High degree of characteristics for internet service competition is social accounts' competition. In fact, this kind of "simple and crude" understanding behind the humanities embodied is the interest of more pure leisure life. Thus, this humanistic nature gives banks unbounded business which is a significant advantage for them. This unlimited business also helps another well- defined Internet credit model aware its bottleneck in development. Another revolution is the virtualization of bank cards. Bankcard is the physical product that our banking industry comes to the customer. However, the inconvenience that this physical product brings to Internet life also affects the user experience of activities related to banks. The multi-problem partly solves the outbreak of payment. It helps us to understand users' financial needs better.

Chinese people payment habits have changed dramatically. They just skipped credit cards and went to mobile payment.The changes happened in people's habits first. Most of the users do not realize that the dramatical change is happening. They make their moves just due to digital cash can make everything convenient and comfortable. China's Internet users would have different preference to electronic payment terminals in different periods of a day. Cell phones and tablets have the highest use rate among all electronics. People trends to use them during all the time they are awake. Followed by computers, they cover users' working hours, leisure time on weekdays and holidays. Therefore, users will have access to cell phones and tablets the most commonly. The central payment types for cell phones and tablets are third-party mobile payments and mobile banking payments. How to attract users to stick to using them becomes the most critical work for third mobile payments and mobile banking to make their strategies for the future. Users can access the computer the most frequently after cell phones and tablets. The primary payment types for computers are third-party Internet payment and online banking payments. The line POS is less likely than the cell phones and computers that users have access to in their daily life. Therefore, the primary payment type, cash, credit card machine mobile payments are less popularthan the previous ones. Few people will shop or pay bills when they are watching TV. It is the reason that explains why TV payment receives the least interest in all types of digital payments.

Social networking plays a vital role in this process. Wechat is a super popular social media in China. Like how Facebook is widespread among American people, Wechat has become the most popular communication tool for Chinese people. We not only conversate with friends but also post our pictures of daily life and share our thoughts by Wechat.

Based on research, 71% of shoppers are from Urban area, and 82.3% of buyers are between 25-45 years old. According to these users analysis, apparel, food, skin care and beauty attract these users most. They spend most of their money on things like these.

Everything is data today.

Today, the big story in data is about using proprietary information on existing underserved users (customer geography, purchase preferences, transaction patterns). Financial Internet companies such as Alipay and WeChatpay are using these data to understand users' financial needs more expert to increase transaction volume and cross-sell appropriate products, which leads to higher efficiency. At the same time, the result of data analysis helps small and medium-sized companies have a more productive development of their occupation.On another hand, money is also data for us. Cash can be viewed as an object that is transferred to account numbers we have.Digital payment can also make payment processes at this point directly and by merely storing data such as credentials of an existing payment instrument.Each enterprise and organization, with its resources the credit recording "quantity," makes guarantee the delineation of boundaries.This credit record can present in any country mortgage, financing, investment, consumption and other rights. The degree of people’s wealth is also measured by their credit score. In 2008, Alipay launched Taobao sellers credit services business. In a month, nearly 150 retailers submitted a loan application. In 2016, Alipay released “social recognition” in Beijing and Shanghai. It allows users who have real consumer records to borrow an umbrella for free. It is not the only activity that provides convenience for users but also an improvement for Chinese digital payments revolution.“Labor was the first price, the original purchase - money that was paid for all things. It was not by gold or by silver, but by labor that all wealth of the world was originally purchased.” said by Adam Smith. In the future, people are their bank. They work for a living and live by themselves. Object money will useless at that time. I think everyone will be a dynamic bank. Based on people’s digital credit record, one personality such as figure print and eyes could serve as unique password or media in a trade.


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