This is a my second dispatch from China, writing this from a cafe in Taiwan. If you hadn’t read my first piece on a Foreigner’s guide to China, you should read that as well.

Payments in China feels really futuristic. I was actually a bit shocked to come to Taiwan and be reminded of how payments work in the West – a large reliance on paper receipts, cash, and existing financial rails, whereas only 24 hours earlier in mainland China that I could use my phone for basically everything.

Some months back, I wrote a piece on Crypto Superapps and why they’re so exciting, but I think it’s interesting to dig into the original superapps – WeChat and AliPay – through the backbone of their respective ecosystems: payments

Wechat and Alipay

WeChat is the messenger app of choice in China, and Alipay is the app from Chinese equivalent of Amazon, Alibaba.

It seems that most people use Wechat Pay as it’s already baked into WeChat, but some places only accept Alipay, and they both work slightly differently.

At it’s core, both services are linked to bank debit cards.

These cards, unlike cards in the US, settle payments instantly – no need for T+2 delayed settlement. The reliance in debit cards is a reflection of how China is primarily a cash based society – even when it comes to online payments.

You can also use credit cards, but I suspect the speed of settlements reduces some of the need (and the attractiveness) of credit cards. I also think the reason they were so resistant to foreign bank cards (which have 2+ day settlement) was how it breaks the atomicity of the payments chain.

This removes the need to top up or withdraw your balance from the platforms to make payments – payments within the app directly take funds from your bank account.

After you’re in the app, there’s three main ways of interacting:

• On-Phone payments

• QR Scan payments

• Scan QR payments

On-Phone Payments

On phone payments is probably the simplest to easiest to understand – this is when the transaction originates from the same phone the payments app is on.

Here, if you pay for a taxi on Didi (China’s Uber), you have two ways of doing it.

If DiDi is opened as a mini app within WeChat or Alipay, it can make a direct request and the popup from the parent app will show up confirming the details.

As an aside, this mini app model allows for additional permissions to be passed in that go beyond the limited set of permissions PWAs have – e.g. if DiDi needs the user’s location, a modal from WeChat appears, granting the mini app permissions that the parent app already has.

If DiDi is opened as it’s own app however, users are deeplinked into their respective payment app to confirm the transaction.

In a sense, this is pretty similar (but a much more streamlined version) of the current mobile web3 experience, but radically different from current web2 payments. Metamask Mobile for instance pops up a modal when using the in-app browser to sign transactions, or if you’re using the mobile site directly, you can get deeplinked into the mobile wallet of choice with WalletConnect.

QR Scan Payments

This is when you directly scan the vendor’s QR code from within the payment app.

You land onto their equivalent of an address, where you can input a specific amount to pay. Sometimes you can land on a custom UI (e.g. for a restaurant), where theres some additional details you can put down and the payment is done through the above methods.

Scan QR Payments

This is slightly different, and is likely one of the more common ways that payments are processed at stores for instance.

Here, you pull up the QR code and then you bring it up to a dedicated scanner. This QR code acts as an “signature” for the any payment interaction without any need to confirm.

The payments is read by a simple camera that gathers authorization data from the QR code and then sends it off to the WeChat server requesting that 200 Yuan is sent from Bob to McDonalds for instance.

Casually showing this code is dangerous as someone else can scan it and spend, but the code refreshes every minute, and each code has a one time use.

(Alipay only) Face Pay

This is something that only Alipay offers, but the ability to pay with face was mindblowing to me. To use it, you have to first be enrolled through Alipay app, but you can look into a camera at the PoS terminal for a few seconds and your payment is processed.

If you think about it, it’s the ultimate seamless experience – the authentication and authorization step are combined through the use of facial recognition – no phone required here.

This opens up some areas for misuse – and is maybe why I’ve only seen it at larger retailers and some metro systems, but it’s a fascinating way at looking at payments (pun intended).

Conclusion

Hopefully this gives a good overview of payments in China, especially from a crypto perspective.

While it’s difficult to replicate the distribution channels that Alibaba and Tencent have had to make their payment solutions so dominant a captive market, I think there’s definitely some aspects with regard to the UX flow that can be copied over into crypto mobile apps that are trying their own attempts at authentication.

• Pre authorization of transactions

  • If users already intend on executing a financial interaction, after accessing this specific part of the app is opened up, the transaction execution is as seamless as possible

    • More tangibly, instead of requesting a user to connect their wallet and then execute a transaction, this can just be one interaction.

• Richer on device interactions

  • Currently the Metamask in-app browser piggy backs off of existing ways of using and creating crypto apps for web – but this is limited by desktop

    • What if there were a framework for mobile-web specific features, as opposed to repurposing existing features for a mobile sized display

• Richer in person interactions

  • This is likely least applicable to a crypto payments app given the lack of IRL interactions, but QR allow for more expressivity than the traditional “payment usernames” – especially for specifying interactions

  • Face powered options could be good for high flow areas (such as metro systems)

Payments is often heralded as the crowning usecase of crypto, but I think there’s still a ton of work we can do to make things easier – and hopefully these lessons from China are a first step.