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Forget GAFA, the real threat is FATBAG

I’ve blogged a few times about GAFA – Google, Apple, Facebook, Amazon – as the worrisome Gang of Four.  Sure, we can worry about them, but the thing is to stop worrying and do something.  Australian banks decide to stop Apple by taking them to court; British banks would rather partner with all of them; and American banks try to put regulatory barriers in their way, such as restricting access to bank data to the customer only.  Whatever.  These guys are in the game.  Google have Samsung and Android Pay, whilst Apple are doing all they can to get a Wallet working.  Challenges ahead.

The challenge is specifically how to get customers to change behaviours and, whilst the mobile wallets on offer are harder to use than a card, it’s not working.  It probably will, but even if Facebook Buy buttons and Apple Wallets are rocking the world, they haven’t actually threatened or changed the banking system.  Banks are still the underpinning of the mobile social world.

But then a new Gang of Six has appeared, and I would worry about these.  The Gang of Six is FATBAG – Facebook, Amazon, Tencent, Baidu, Ant and Google.  I’ve dropped Apple as they’re a hardware and software firm, who happens to also be an internet giant; but their focus is not the net, as evidenced by the Apple iCar that’s coming soon (although Google are also going same route).

That leaves the Gang of Six who are all 100% internet originated and 1000% internet focused (hence why Google is there).  Ant Financial (rather than Alibaba) has to be the biggest threat/opportunity in this space.

I’ve blogged about them before, and was interested in the recent move of Alipay – an Ant subsidiary – out of China and into Europe.

Alipay to be introduced in Europe by the end of 2016

Alibaba’s partnership with the global leader in seamless payments, Ingenico Group, will see China’s biggest mobile payment service Alipay wallet being available to Chinese users travelling in Europe before the end of 2016.

As part of the deal, Chinese Alipay customers will be able to use the mobile payment service in European locations already offering Ingenico’s in-store payment system which already supports the Apple Pay and Android Pay services, thereby saving the Chinese tech giant from having to strike more individual deals with European merchants …

This development comes at a crucial time for Chinese outbound tourism to Europe, as ongoing security fears are causing arrival numbers from China to fall. With a total of 195 billion USD in 2015, the Chinese are the world’s largest group of tourists by expenditure – spending almost as much as the second-placed Americans and third-placed Germans put together – facilitating their shopping habits can help soften the blow of reduced arrivals.

OK, so it’s just a deal that allows Chinese tourists to pay with their mobile, as they tour around the museum we call Europe.  Great.  But hold on one second … what’s this?

Alipay app coming soon to Europe

German vendor Wirecard developed an app which enables European retailers to accept payments from China’s Alipay through a QR code scan.  The app will primarily be of interest to cafes, restaurants and clothes retailers, said the German firm, since those retailers are most popular with Chinese tourists in Europe. The app enables retailers to accept Alipay as a payment method without a costly upgrade in their point-of-sale hardware, said Wirecard.

OK, so it’s still just for Chinese tourists, but the twist here is that Wirecard are the innovative bank behind Holvi, Loot and more.  Lots of European FinTech start-ups use Wirecard as their back end banking service.  So let’s imagine the idea that Alipay could become part of a wider ecosystem of mobile payments allowing Alibaba and Ant to start, with Wirecard, offering full bank services in Europe.

Now that would be worrying for incumbents … but of course, it would never happen, would it?


About Chris M Skinner

Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, the Finanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal’s Financial News. To learn more click here...

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