Last month, Jing Ulrich, vice chairman Asia Pacific at US bank JP Morgan Chase, praised the non-bank payment services that process more, faster, and with greater ease than any bank, South China Morning Post reported.
“JPMorgan every year, as we speak, processes through our QuickPay 94 million payments,” she told the Rise conference in Hong Kong.
“But Tencent, the Chinese company, over Chinese New Year, in five days processed 46 billion payments. Basically that means 800 million payments per hour.
“Visa has a maximum capacity of processing 25,000 payments per second. But Alipay can process 50,000 payments, twice as much, per second.”
A recent report from another big US bank, Goldman Sachs, concluded that while Amazon does not pose a major threat to credit card networks like Visa, a possible expansion of Tencent and Alibaba payment platforms into other territories could bring major risks.
"The card networks face real threats from China and elsewhere, and will need to invest and partner aggressively (Apple, Square, Klarna) to ensure that faster payments stay on their rails," the brokerage said.
The numbers in China alone are impressive. The value of third-party payments grew more than 74 times in the six years ending 2016. Overall, the Chinese payments market is worth US$11.4 trillion.
According to Chinese central bank data, online payments through third party services grew 43% year-on-year.
“In the next three to five years, the line between traditional banks and fintech companies will become blurred. Traditional banks have to, in some ways, become fintech companies themselves,” Ulrich said.
“Otherwise we will be left with no business.”
Data sourced from South China Morning Post, Investor’s Business Daily; additional content by WARC staff