Digital payments in China: adoption and interactions among applications

Le paiement numérique en Chine: adoption et interactions entre applications

Dominique Torre () and Qing Xu
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Qing Xu: GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis (1965 - 2019) - CNRS - Centre National de la Recherche Scientifique - UniCA - Université Côte d'Azur

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Abstract: Alipay and WeChat Pay, the mobile payment services of Alibaba and Tencent, rapidly spread out in China from the early 2010s. Their successes motivate three open questions: (i) why the two companies did not really compete to gain the exclusivity of their clients? (ii) why the installed basis of the incumbent did not prevent the success of the entrant? (iii) why the new entry accelerated the dffusion of the incumbent's solutions? This paper elaborates an adoption model which encapsulates the distinctive features of the two service providers. It points out that complementaries between the two solutions (dfferentiated services offered to clients, decreasing adoption costs and contrasting business models) can explain the interest of both service providers to avoid any strong competition. During the adoption phase, Alipay and WeChat had interest to a mutual development as soon as they did not offered the same product, with the same business model. In this situation, every improvement of the technology of each operator increased the profit of the other. This strategic complementarity effect between the two competitors could however decrease during time their incentive to innovate.

Keywords: strategic complementarities; online payment; electronic wallets; payments in China; mobile-payment; paiement mobile; complémentarités stratégiques; paiement en ligne; porte-monnaie électronique; paiements en Chine (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-cna, nep-com, nep-isf, nep-pay and nep-reg
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Published in Revue d'économie industrielle , 2020, From the digital economy to the digitalization of the economy, 172 (4), pp.55-82. ⟨10.4000/rei.9471⟩

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Journal Article: Digital payments in China: adoption and interactions among applications (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-03313693

DOI: 10.4000/rei.9471

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