Interoperability initiatives are expected to drive growth of mobile payment in Europe

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An announcement was made in June 2019 that China based Alipay would partner with six mobile wallets across Europe to promote QR code interoperability. This kind of a partnership is not the first of its kind. The recent deal has been built upon a similar partnership between Vipps, ePassi and Alipay from late 2018.

According to Eurostat, EU residents made 2.1 million trips to China in 2016 and 10.5 million Chinese tourists visited Europe the same year (as reported by Statista). By introducing QR code interoperability of mobile wallets in these regions, the travels of both Europe and China will be able to enjoy a unified customer experience. The travelers of both the regions will be able to make international payments from their local mobile wallet in foreign countries that support the new QR code format.

The six mobile wallets that will unite Europe’s flourishing yet fragmented mobile payment industry include Bluecode, ePassi, Momo Pocket, Pagaqui, Pivo and Vipps. The partnership of these wallets will enable their users to make mobile payments across borders in 10 European countries. Also, not to forget the Asian partner in the union, Alipay which serves 1 billion users in Asia, making it the largest lifestyle app in the region. Alipay is notably not just a mobile wallet but rather a lifestyle app, because it has integrated its mobile payments with a whole suite of services such as ordering a taxi, booking a hotel, buying movie tickets, paying utility bills, making appointments with doctors and so on.

These six mobile wallets in Europe account for a total of 5 million users and 190,000 merchants, who will now be part of an integrated network, along with the 1 billion users in Asia. By means of this partnership, the mobile wallets have all multiplied the network effects of their respective platforms. In the partnership, Alipay is to provide a compatible QR code format while ePassi and Bluecode are to provide technical support to make the integration of the new QR code.

Beyond Alipay’s consumer centric services, it also provides technological solutions to financial institutions in China to help them lower their operating costs and increase efficiency. The CEO of Spain’s MOMO Group stated that their acceptance of Alipay increased revenue for their merchants in Spain from Chinese tourists. Similar to MOMO Group’s experience, ePassi also noted that their past experience of accepting Alipay from Chinese tourists in Finland has significantly increased revenue for their merchants. These proven trends drove the enthusiasm to collaborate with even more mobile wallets across Europe to further increase revenue. ePassi also stated that the interoperability partnership is a medium for working towards their ambitions of creating a greater ecosystem. They want their merchants to be able to accept payments from tourists and enable their customers in Sweden and Finland to have a rich experience of being able to make payments throughout different countries in Europe. Based on initial success, it is expected that interoperability will increase even further and expand into other countries to drive growth of mobile payments in the future.

As fintech startups such as the mobile wallets continue to disrupt traditional banking, leaders of the banking industry recognize the need to collaborate and digitize their service offering to be able to stay relevant in the future. In recognition of such need, seven European payments companies announced in September 2019 that they’d be teaming up to build a cross-border payments network in Europe. These seven organizations are Danske Bank A/S’s MobilePay, Belgium’s Bancontact Payconiq, Germany and Austria’s Bluecode, Norway’s Vipps, Switzerland’s TWINT, Portugal’s SIBS and Sweden’s Swish.

The joint network by these seven companies will impact 25 million users through the European Mobile Payment System Association, which will have a much greater impact than Alipay’s partnership and footprint in Europe.

To know more about changing mobile payment market dynamics in Europe, click here.