After several competition, as the user penetration rate and scene penetration rate have reached a high level, the battle in the mobile payment market seems to be over.

Although Alipay and Tenpay have been the third-party payment service provider leader in China, they are still exploring new incremental markets, trying to replace absolute growth with structural growth. The payment enterprises in the second echelon also make efforts in their respective subdivisions. JD Pay launches a "self-service cash register + face scan payment" smart cash register solution for large-scale shopping malls and hypermarkets. And YeePay pays more marketing efforts in the aviation and travel field.

Among the fierce competition in the mobile payment market, there is such a group that seems to have a short success around 2016.

When the era of pursuing short and fast traffic pattern is past, it also means that the midfield battle of mobile phone manufacturers represented by Huawei Pay is starting.

Mobile phone manufacturers vie for China's payment market 

In 2014, at Apple's fall new product launch event, NFC-based mobile payment methods - Apple Pay and iPhone6 / iPhone6 Plus were released at the same time. On February 18, 2016, the Apple Pay business was launched in China.

After Apple Pay entered Chinese market, the Samsung Pay service equipped with UnionPay QuickPass was also launched, and many Chinese mobile phone manufacturers including Huawei, Lenovo, ZTE, and Xiaomi began to deploy mobile payment market.

In 2016, the mobile payment battlefield changed from WeChat Pay and Alipay's two-party war to multi-party competition that includes third-party applications and mobile phone manufacturers. The future pattern of mobile payment has become a hot topic in the industry.

Over the past four years, the combination of "UnionPay + Mobile Pay" has obviously not shaken the status of Alipay and WeChat Pay. According to data released by iResearch, in the fourth quarter of 2019, no mobile phone manufacturer's payment products were on the list in the Chinese mobile payment market. It also means that no mobile phone manufacturer's market share of payment products reached 0.2%.

Among many Chinese mobile phone manufacturers, Huawei is a well-deserved leader. Recently, the "China's mid-to-high-end price segment smartphone market share in 2019" released by the data research organization lDC shows that among all the channels of the mid-to-high-end mobile phone market share in 2019, Huawei's share is the highest, accounting for 56%.

Previous data from Counterpoint Research, a foreign data website, shows that Huawei has an absolute leading position in the Chinese mobile phone market share, with 34% in Q1 2019, 35% in Q2 2019, and 40% in Q3 2019. In the third quarter of 2019, Huawei's market share has exceeded the sum of Vivo and OPPO.

Based on the particularity of Huawei's status in the mobile phone market, the development of Huawei Pay has naturally attracted other Chinese mobile phone manufacturers' focus of payment products.

The leading position of WeChat Pay and Alipay is difficult to shake

When mobile phone manufacturers rushed to enter mobile payment market, people can't wait to put it on the opposite side of WeChat Pay and Alipay.

However, it is worth noting that mobile phone manufacturers have chosen a completely different way to enter mobile payment market. Unlike WeChat Pay and Alipay's scanning QR code payment, mobile payment launched by mobile phone manufacturers is based on the NFC function. The mobile phone only needs to be close to a POS terminal that supports UnionPay QuickPass (without scanning the QR code) to complete the payment.

Perhaps a reasonable assumption can be made that from the beginning, Huawei Pay had no intention of competing with WeChat Pay and Alipay.

First of all, in the mobile payment market in 2015, Alipay and Tenpay accounted for 72.72% and 14.61% of the market share respectively. Huawei Pay has no possibility of counterattack in the short term. And Huawei is aware of this, so it chooses the NFC payment method , which is totally different from the scanning QR code payment.

Secondly, the homogenization of mobile phone competition is becoming more and more obvious, and mobile phone manufacturers need new scenarios to retention and acquisition. After Apple Pay and Samsung Pay are launched one after another, Huawei will be very passive if it does not have a payment function. Therefore, the launch of Huawei Pay is not only to use mobile phone traffic for financial business, but also to improve user stickiness through payment functions.

From the perspective of China UnionPay, the important role in the industry chain of mobile phone manufacturers entering payment market, Huawei Pay and other mobile phone manufacturers' payment products are only means for UnionPay to use mobile phone manufacturers to counter WeChat Pay and Alipay. Huawei Pay has no intention of competing with WeChat Pay and Alipay, nor is it able to compete with the two powers.

Although Huawei is the leading of the mobile phone market, the number of its users is far from being able to compete with WeChat and Alipay. In addition, payment is not just a product, it is also a business. The key lies in the capture of transaction scenarios. WeChat Pay has the "high frequency" C-end advantage, while Alipay has a "multi-dimensional" scenario. In the "scene" era of mobile payment, Huawei Pay, a "latecomer" in the market, is even hard to win a place.

In the face of the huge number of users, Huawei mobile phones obviously cannot isolate WeChat and Alipay. Some insiders pointed out that the strategy Huawei takes is more like an aggregate payment solution.

The big ecology behind the hardware

At present, Huawei Pay has not yet achieved success in the Chinese mobile payment market. However, it is still full of variables.

Technology drive may be one of the variables. Recently, IYiou.com(ID: i-yiou) released "Foreseeing 2020: 10 Key Words for the Development of Fintech". It pointed out: in 2020, the third-party payment industry will become intelligent and non-inductive driven by technology.

On the one hand, the exploration and application of biometrics technologies such as fingerprints, sound waves, irises, and face recognition will further improve the intelligence and non-sensitization of user payments. On the other hand, wearable devices and other payment terminal devices will be applied and promoted to a certain extent, and applied to non-contact payment application scenarios such as public transport, subway, convenience store, etc.

NFC payment is extremely convenient to use, which is its obvious advantage. Scanning code payment has been more popular before, one of the main reasons is that its technical difficulty is far less than NFC.

Another trend worth noting is that under the background of technology-driven, traditional bank card acquiring methods are also changing. Acquiring institutions are exploring to upgrade mobile phones to new POS terminals, which can lower the threshold for acquiring. On February 23, 2020, Lakala announced strategic partnership with Huawei. The two sides will connect Huawei users and the company's merchants around Huawei terminals, and carry out business cooperation for mass users and merchants, such as mobile POS collection, member marketing, convenience business and Huawei pay promotion.

It can be seen that the hardware advantages paid by Huawei have won some opportunities under the background of technology driving.

Some insiders pointed out that in the short term, the launch of Huawei Pay is to improve consumer experience for end users, stabilize existing users through application services and maintain terminal increments. But in the long run, payment is often supported by a complex financial ecology. With its own hardware technology, Huawei has to the ability create an open overall solution to serve Huawei's own vast industrial ecosystem.

In July 2019, Huawei jointly launched a change service based on bank II and III accounts with a number of banks, which means that Huawei has begun to build a financial software system within the hardware ecosystem. In this way, Huawei's users can open Huawei Pay with a one-click change account and automatically generate a customized "change card" in Huawei wallet. The function of the card include mobile phone flash payment (NFC payment), payment code payment, touch tag payment and online payment.

Huang Dazhi, a senior researcher at Suning Financial Research Institute, also mentioned that mobile wallets are also exploring more services, such as diversion and loan assistance services for compliant loans. And in April this year, Huawei launched Huawei Pay-based digital / physical credit card Huawei Card. A series of actions can see the overall layout of Huawei's financial ecology, which is also a means for Huawei to enhance the brand effect and increase user stickiness.

Huawei Pay to enter the overseas markets

The layout of the overseas markets may be another variable of Huawei Pay.

In April this year, UnionPay International announced that it will cooperate with Huawei and four mainstream banks in Hong Kong and Macau to launch UnionPay mobile payment Huawei Pay in Macau for the first time, and to increase access institutions in Hong Kong to serve more users. Since the beginning of this year, the overseas layout of the UnionPay mobile payment Huawei Pay service has continued to accelerate, which has been implemented for the first time in Macau, Singapore and Pakistan.

The overseas layout of Huawei Pay is only a small part of its ecosystem. On February 24 this year, Huawei Terminal held an online press conference, officially announcing that Huawei's HMS mobile service has entered the overseas market, which displayed its ecological strategy to overseas users.

Huawei Pay is an important part of Huawei's HMS ecosystem and will provide mobile service experiences for consumers around the world.

IYiou Finance believes that compared with Chinese third-party payment platforms such as WeChat and Alipay, it will be much easier for Huawei Pay to penetrate into overseas market by relying on its brand awareness and mobile media accumulated overseas.

Currently, the main forms of WeChat Pay and Alipay to enter overseas market are applying for local payment licenses and investing in local payment companies. The main service target of the two is Chinese, so there are no effective measures to take root in the local area.

At the moment when the Internet traffic dividend peaks, payment giants have been looking for breakthroughs in continued growth. With the advent of the 5G era, payment methods such as face-to-face payment, aggregate payment, and non-sensual payment will usher in a series of changes. From China to overseas, the users and scale of Chinese mobile payment products are far from the saturation point. As financial opening up continues to deepen, third-party payment platforms will also usher in international competition and opportunities.

As far as Huawei Pay is concerned, the end of the battle is far from clear.

This is an article from WeChat official accounts IYiou.com(ID: i-yiou), written by Gao Caihong, translated by Chris Yuan.