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Digital payments in China: adoption and interactions among applications
[Le paiement numérique en Chine : adoption et interactions entre applications]

Author

Listed:
  • Dominique Torre

    (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)

  • 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)

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.

Suggested Citation

  • Dominique Torre & Qing Xu, 2020. "Digital payments in China: adoption and interactions among applications [Le paiement numérique en Chine : adoption et interactions entre applications]," Post-Print halshs-03313693, HAL.
    • Handle: RePEc:hal:journl:halshs-03313693
    DOI: 10.4000/rei.9471
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-03313693
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    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

    strategic complementarities; online payment; electronic wallets; payments in China; mobile-payment; paiement mobile; complémentarités stratégiques; paiement en ligne; porte-monnaie électronique; paiements en Chine;
    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

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