China's banks lost $ 22B to Alibaba and Tencent in 2015, but that is not their biggest problem

Despite years of dealing with mobile payment programs and pilot deployments in major cities, banks and China UnionPay largely they have been left out of the mobile payment revolution China. According to Analysys China UnionPay in Q3-2015 it controls approximately 1.8% market share of mobile payments transaction volume through its China Mobile Pay JV and arm Merchant Services. Basically, very, very little. At the same time, the markets of mobile payments and Internet from China grew more than 40% from the 2014-2015 school year and were dominated by suppliers of digital pay Alipay and Tenpay.

This led to one billion RMB 150 (~ $ 23 million) "loss" in rates of potential transactions for banks and China UnionPay in 2015 as overall consumer spending continued to spend payments with traditional card where banks are strong, payments online, where they are weak. It is anticipated that this number will increase to 400 million RMB (~ $ 61 billion) * in 2020. Although overall rates card transaction only account for about 5-8% of the income of banks in China, $ 23 million is still significant.

The financial loss certainly hurts, the biggest concern is the transaction data. Much of it: tens of billions of transactions were in all digital channels in 2015. Certainly, big data in any sense of the phrase.

The challenge is that payment transactions Alipay and WeChat not go through banks or through the UnionPay card network. Basically Alipay and Tenpay (behind payment platform WeChat) have their own payment network or rails ''. As a user pays money moves from the user's bank account to the user in Alipay platform, then to the merchant's account in Alipay and then eventually to bank traders.

In a Alipay transaction, the only thing is that a bank would debit the account of a user will Alipay and after a period of time later, a credit to the merchant's account of Alipay. The following chart illustrates this:

Here are some transactions taken from bank statement of a user (sanitized for privacy reasons). The middle column is the name of traders. The first two transactions are Tenpay, the platform behind WeChat payment, and the third of Alipay, and that's really all it says the statement and the bank sees. The bank and China UnionPay have no idea where the user was or what they were buying - only Alipay and Tenpay can see that.

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