President of the United States, Donald Trump, who lost the election and is set to leave office in a couple of weeks, has signed an executive order banning transactions with eight Chinese applications, including Alipay and WeChat Pay.

Interestingly, the order is set to take effect in 45 days, after Donald Trump leaves office. The applications banned with this executive order includes apps from some of the biggest companies like Ant Group and Tencent.

In an attempt to justify the ban, Trump said that the applications can access private information from users and could be used by the Chinese government to “track locations of Federal employees and contractors, and build dossiers of personal information.”

Several US-based companies, including Apple, Ford Motor, Walmart, and Walt Disney previously objected to an executive order by Donal Trump that banned Tencent’s WeChat as well as ByteDance’s TikTok. A federal court has issued a preliminary injunction blocking the ban on WeChat.

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As noted above, the executive order bans Alipay, a payments application from Ant Group with more than a billion users. It also bans three applications from Tencent, which includes WeChat Pay, QQWallet, and Tencent QQ. Other apps in the list include CamScanner, SHAREit, Vmate, and WPS Office.

The move seems to be furthering the US-China trade war which started when Donald Trump issued an executive order banning China-based Huawei Technologies, the world’s largest telecom equipment manufacturer.

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PayPal has received the green light to acquire a majority stake in the local payments platform, GoPay. With this approval from the People’s Bank of China (PBOC), PayPal has become the first foreign payment platform to enter the Chinese market.

According to the statement from GoPay, PayPal will acquire a 70% controlling stake in the company through one of its subsidiaries called Yinbaobao based in Shanghai. With this move, PayPal will compete with the likes of local payment platforms such as Ant Financial’s Alipay and Tencent’s WeChat Pay, both of which are extremely popular in China. GoPay has licenses to carry out online as well as mobile transactions.

Although this approval from PBOC may come as off as surprising to many given the recent trade war, it is in line with the statement made by China’s central bank last year. The central bank said that it will open up China’s payments market to foreign companies to improve competition. In this regard, American Express was approved to set up card-clearing services in China late last year.

PayPal is yet to disclose the terms of the deal. But it said that the deal is expected to close by Q4 2019.

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China is among those few countries that have widely adopted the mobile payments system, making the system quite easy to use compared to the traditional ways. The popularity of mobile payments in China was driven by the use of QR codes, making the process super easy as the user just need to scan the code to make payments.

But now, since the QR codes are gaining more popularity outside China, the tech giants in the Chinese market are moving towards a newer system for mobile payments — facial recognition. Companies like Ant Financials, an arm of Alibaba and WeChat backed by Tencent, have already started using facial recognition.

The facial recognition-based payments system provides more ease and security as well as portability compared to the QR codes method. Also, the use of this new method could further boost the usage of mobile payments as it has the potential to bring a new wave of less tech-savvy users, such as the elderly.

Alipay first rolled out its Dragonfly facial recognition system, which is an upgrade of its Smile-to-Pay system, in December last year. Since then, the company has expanded it to over 300 cities in China.

Following its footsteps, rival WeChat Pay also started offering its device to merchants around three months later. The device is capable of scanning both a customer’s face as well as QR codes for payment. However, the company has not shared statistics.

The adaptation of this new system of facial recognition has made the shopping experience a breeze. During checkout, all the user needs to do is choose facial recognition to pay and look at the tablet’s camera. Once authorized, the amount will be deducted from the user’s account. Now, the user doesn’t need to take out the phone and scan the QR code and then proceed with the steps to make payment.

This is also leading to less reliance on cashiers. For instance, Alipay is now offering solutions such as vending machines and self-checkout machines that both use face-scans to process payments.

The battle for the mobile payments market share in China is majorly between two giants — WeChat Pay and Alipay. As per the reports, both the companies jointly accounted for over 90 percent of China’s mobile payments last year. Both are almost equal when it comes to ticket size, with WeChat Pay accounting for 45 percent of total transaction amounts and Alipay for 46 percent, reveals market research firm Ipsos.

There are currently about 583 million users who are using mobile payments technology. With over 562 million Chinese still remain to get connected to the internet, the market has a lot of room to grow.

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Chinese internet giant Tencent is known for its range of popular games such as Playerunknown’s Battlegrounds (PUBG) game. The mobile game has become a popular one in India such that it was even banned recently. One lucrative aspect of online games is in-app purchases. In order to leverage the popularity of its mobile games, Tencent is reportedly planning to enter the Indian market soon with its WeChat Pay payment platform. 

According to tech blog Entrackr, Tencent execs met with India’s National Payment Corporation of India (NPCI) a couple of weeks back to discuss obtaining a license for the payment service. The Chinese tech giant plans to launch the service as early as May or June this year.

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WeChat Pay is based on the Unified Payments Interface (UPI) which has a lot of participants in India. WeChat Pay will have to contend with outfits such as GooglePay, PayTm, BHIM, PhonePe and Mi Pay. With the monthly UPI transaction volumes consistently surpassing  Rs. 1 trillion ($14.49 billion) in December, January, and February according to NCPI’s website, Tencent may be heading for a lucrative market. Also, the popularity of its range of gaming apps may provide it with the avenue to break into the market.

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