China Payments – Field Trip with Russ

Guest post today from my General Counsel and Chief Privacy Officer Russell Schrader. For those of you who don’t know Russ, he spent 18 yrs with Visa as their first Chief Privacy Officer.Russ just got back from almost 3 weeks in Asia and had a terrific view (from the field) on payments there. Given his deep knowledge of payments I thoroughly enjoyed his perspective.

July 11–
Just back from 3 weeks in China: Beijing to Tibet to Shanghai. Payments guys never sleep or just vacation, so here’s my report.

The phone is king.  It started the first day when the guide out his mobile number and said to call if there was anything we needed.  Some said they didn’t have roaming plans or want to pay the Verizon or ATT $10 per day. The guide’s quote–“everyone has a phone, even cats and dogs. Mime a phone and show them the number and they’ll call it for you.”  The New Yorkers responded with “yeah, right,” but darned if those who needed help didn’t get it quickly and easily.

It’s about social mobile payments regardless of age.  WeChat and Alipay QR codes are everywhere and used in stores, taxis and vending machines.  One of the few panhandlers had a sign around his neck with a QR code on it! The phone is the wallet.

It’s not about Apple Pay. After a tour of the Three Gorges Dam on a hot day, I went a vending machine that had the QR codes of 3 different systems and Apple Pay. I whipped out my phone–I’m an Apple Pay fan–but no Coke for me.  The locals tried and one bought me a soda with WeChat, saying, “No one takes Apple Pay.  They came too late.”

It’s not about Credit.  Even more than Apple Pay, I like the Sapphire Reserve card.  But merchant penetration is still a huge problem. The tailor agreed to take it for my deposit, with a 6% surcharge.  The shop actually has an assistant whose duties include escorting customers to a nearby ATM to get cash and return quickly and safely.

It’s not about Debit.   The ATM wouldn’t access my account and give me $100.  Not to worry, my guide said, she knows another.  Still no luck with the second local bank’s system.  Finally, I found a Citi ATM that worked, and my bank refunds foreign ATM fees.

The phone really is king, Part Two.   Shanghai Disneyland has a Preferred Access program that lets you dodge the 2-3 hour wait for the main attractions. But to keep the passes from being sold or transferred, I had to present a photo of myself taken at the time of purchase standing next to a Disney employee holding a sign.  Without the photo, the passes were worthless.  The catch? The photo is taken on MY phone, and they have no record or copy. What if someone doesn’t come with a phone?”  She laughed: “Everyone has a phone!”

And as a privacy guy, I really liked Disney’s approach. But to buy a ticket online, they insist on having my passport number as well as presenting the original passport for scanning at the ticket booth. But that’s another post…

Russ

 

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