IDEAS home Printed from https://ideas.repec.org/a/cai/reidbu/rei_172_0055.html
   My bibliography  Save this article

Digital payments in China: adoption and interactions among applications

Author

Listed:
  • Dominique Torre
  • Qing Xu

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.

Suggested Citation

  • Dominique Torre & Qing Xu, 2020. "Digital payments in China: adoption and interactions among applications," Revue d'économie industrielle, De Boeck Université, vol. 0(4), pages 55-82.
    • Handle: RePEc:cai:reidbu:rei_172_0055
    as

    Download full text from publisher

    File URL: http://www.cairn.info/load_pdf.php?ID_ARTICLE=REI_172_0055
    Download Restriction: free
    File URL: http://www.cairn.info/revue-d-economie-industrielle-2020-4-page-55.htm
    Download Restriction: free
    ---><---

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Qing Xu, 2021. "East Asia and East Africa: Different Ways to Digitalize Payments," GREDEG Working Papers 2021-26, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France.

    More about this item

    Keywords

    mobile-payment; payments in China; electronic wallets; online payment; strategic complementarities;
    All these keywords.

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cai:reidbu:rei_172_0055. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Jean-Baptiste de Vathaire (email available below). General contact details of provider: https://www.cairn.info/revue-d-economie-industrielle.htm .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.