Compared to the U.S. mobile payments market, China is light years ahead, particularly when it comes to getting consumers on board with actually using mobile payments.
That’s something the U.S. market hasn’t quite found the recipe for. Now, however, it appears the battle between China’s dominating mobile payments companies is getting even closer than before as other major companies look to partner to help push the mobile payments envelope.
Alibaba-backed Alipay, which is part of Ant Financial, has had the stronghold over the market, with its more than 450 million users. Now, however, Tencent (762 million users) is continuing to make a name for itself as its WeChat social messaging app with payments capabilities gains steam among consumers. And the companies are working even harder to gain market share before major companies like Apple, Samsung and Google attempt to get a piece of the mobile payments pie.
And it’s pretty obvious why.
Data from Euromonitor International, as provided by The Wall Street Journal, shows that mobile transactions in China hit $235 billion last year, which was more than double the year prior. The U.S. market is also seeing strong growth — a 42 percent increase — to $231 billion.
But the U.S. market has been playing catch up for the past few years. When looking at the data for 2010-2012, while China was gaining steam on the mobile payments front, the U.S. market was practically nothing. The U.S. has since nearly caught up to China’s market value.
While Alipay still has a dominating presence in the marketplace, the data show that Tencent is gaining more of the market every year. This comes at a time when Tencent is investing heavily on providing its users discounts and deals with on-demand services.
Tencent’s mobile payments share grew from 11 percent to 20 percent in 2015, while Alipay’s share dropped to 68 percent from its 82 percent. But Tencent still struggles from being able to monetize the service. Ant Financial doesn’t disclose that aspect of its business.
“Overall, we look at payments as a business that may generate more revenue, but we continue to invest in it,” Tencent President Marin Lau told analysts during the company’s earnings call last month.
On Alibaba’s side, one major move it just took was to pair up with Samsung to make it easier for Samsung users to pay with Alipay. Ant Financial has also secured deals with companies like Ele.me, a food delivery app maker to get integrated into those on-demand service options.
To keep up with Alipay, Tencent has been working to expand WeChat’s footprint outside of China, including getting more presence as a payment option online and in stores. But for now, it’s still focusing on playing catch up.
“We are the underdog, but we are starting to catch up,” a Tencent manager told WSJ.
SoftBank is reportedly seeking up to $16.5 in financing for the so-called “Stargate” AI project.
This bridge loan would be the Japanese conglomerate’s largest ever facility denominated in dollars, Bloomberg News reported Tuesday (April 1), citing sources familiar with the matter.
The report notes that SoftBank is looking for financing as it tries to launch a $500 billion artificial intelligence (AI) infrastructure effort in the U.S., as well as robotics and semiconductor projects.
While the company is working with OpenAI, Oracle and Dubai’s MGX on the Stargate project, SoftBank is the primary financier. Announced by President Donald Trump in January, Stargate aims to build big AI-focused data centers in the U.S., with the first of these centers — a 500,000-square-foot facility — being planned for Abilene, Texas.
Sources told Bloomberg the bridge loan could help SoftBank as it prepares to lead OpenAI’s $40 billion funding round, which is being called the largest financing round of all time, and which could value the startup at $300 billion.
SoftBank CEO Masayoshi Son said in December the company would invest $100 billion in the United States in the next four years, creating at least 100,000 jobs focused on AI and related infrastructure. The executive made the announcement at Mar-a-Lago, home to then-President-elect Trump.
“My confidence level on the economy of the United States has tremendously increased with his victory,” Son said. “President Trump is a double-down president. I’m going to have to double down.”
More recent reports have SoftBank planning to invest $1 trillion in AI infrastructure projects in the U.S. A report last week by Japan’s Nikkei outlined that effort, which would include robots designed to help American employers dealing with labor shortages.
The news follows reports Monday (March 31) that large portions of that funding are contingent on OpenAI’s efforts to restructure into an independent for-profit company. If the company can’t reach that goal by year’s end, a provision in the round would limit the financing to $20 billion, the Wall Street Journal reported.
Another report from CNBC also mentions a similar provision, but said the funding would be reduced by $10 billion if OpenAI can’t make the for-profit switch before the end of the year.
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