 Digital payments in China: adoption and interactions among applicationsDominique Torre () and Qing Xu Revue d'économie industrielle, 2020, vol. n° 172, issue 4, 55-82 Abstract: Starting in the early 2010s, use of Alipay and WeChat Pay, the mobile payment services of Alibaba and Tencent, has increased significantly in China. This success raises three questions: (i) why did the service providers not decide to compete to achieve client exclusivity? (ii) Why was the installed base of the incumbent, Alipay, not a barrier to the entrant’s success? (iii) Why did the entry of WeChat Pay accelerate diffusion of the incumbent’s solution? This paper proposes a model of adoption which encapsulates the distinctive features of the two service providers. It suggests that the complementarities between the two solutions (differentiated services offered to clients, decreasing adoption costs, and contrasting business models) may explain the interests of the service providers in avoiding strong competition. During the adoption phase, it was in the interests of both Alipay and WeChat to develop their different products, as any technological improvements introduced by these operators increased the benefits of both. However, this strategic complementarity effect now risks decreasing their incentives to innovate. JEL classification: E42, G23, O33. Keywords: mobile-payment; payments in China; electronic wallets; online payment; strategic complementarities (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:cai:reidbu:rei_172_0055 Access Statistics for this article More articles in Revue d'économie industrielle from De Boeck Université |
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