China’s Mobile Payments Portals
Cross selling term life and personal accident insurance on mobile payment platforms is already well established in China. However, the information that mobile payment providers glean from user transactions extends far beyond transaction data. Location data, purchasing behavior, transaction patterns and disposable incomes are but a few of the signals that will enable highly tailored and scenario based offerings that extend far beyond the cross selling of generic personal accident policies.
China has certainly lead the way in terms of both feature development and adoption of mobile payments with Alipay and WeChat Pay together processing more than 95% of mobile transactions in China. These two portals are owned and operated by two of China’s biggest internet companies, Alibaba and Tencent, both of whom are now pioneering the use of advanced analytics to cross sell a range of financial services to their user bases.
Alipay was launched in 2004 as a secure transaction service for Alibaba’s market leading ecommerce website Taobao. As an early entrant, Alipay racked up 520 million users and pushed several initiatives through Alipay including ‘Dabing Wuyoubao’, a loyalty points program providing RMB 2,000 in lieu of premium for critical illness coverage.
Although Alipay started partnering with insurers to cross sell insurance in 2013, it has only recently begun leveraging the location data of its user base to offer highly personalized and usage based insurance.
Another key part of Alipay’s appeal is that users already turn to it for financial services. For example, a recent documentary detailing the struggles of cancer patients in China increased traffic for insurance on AliPay by 400% during the weekend of the documentary’s release. Ultimately, AliPay’s early entrance into mobile payments, combined with a higher average transaction value on AliPay than WeChat Pay, has ensured its place as a global pioneer of mobile payments. However whether it can continue growing by penetrating into other markets will be its next test.
WeChat Pay is the mobile payment arm of Tencent and originally developed to allow users to send monetary gifts through WeChat for Chinese New Year. Although WeChat launched in 2013, the ubiquity of the WeChat messenger app has catapulted WeChat Pay to 550 millions users in little under three years and 11% of WeChat Pay users have already used it to purchase financial services.
Tencent has also embarked on an aggressive digital insurance path. Distribution partnerships with Fubon Life, Met Life, Taikang Life and Hetai Life bringing access to a range of services and products from these insurers. However, all of these could pale in comparison to the impact with its new broker, WeSure. Established in 2017, WeSure will tap into user data including from WeChat, transaction data from WeChat Pay, and the insurance brokering capacity of WeSure to cross sell highly tailored insurance to WeChat’s 1.1 billion active users.
Although China’s mobile payment pioneers plotted different courses to dominance, both now stand at a crucial juncture. Although both Alipay and WeChat Pay are focusing on offering tailored short term or free health insurance to specific user segments, the challenge now will be converting users to the higher margin universal life, critical illness and private medical insurance products that traditionally suffer from low conversion rates online.