Launching mobile payment systems in the DACH region. A trend investigation and SWOT analysis based on examples of Chinese providers

Textbook, 2020

167 Pages


Table of Content




List of Figures

Index of Abbreviations

1 Introduction
1.1 Research Background & Objective
1.2 Research Structure

2 Theoretical Framework
2.1 Mobile Payment Definition
2.2 Mobile Payment Services in the P2B Market – Overview
2.3 Proximity Mobile Payment Platform– Business Models
2.4 Proximity Mobile Payment – Technologies
2.5 Anatomy of Trends & Innovation Adoption

3 Methodology
3.1 Concept of Trend Investigation
3.2 Concept of SWOT-Analysis

4 Status Quo & Trend Investigation – China vs. DACH Region
4.1 Cultural Aspects
4.2 The Past & the Status Quo in China - Economic & Governmental System
4.3 The Past & the Status Quo in DACH
4.4 Costumer or Trade - The Chicken or Egg Dilemma in DACH
4.5 PMPS Provider Landscape – Google and Apple vs. Local Providers (DACH)
4.6 China vs. DACH Region – A Comparison

5 Discussion of Findings

6 The Résumé via SWOT-Analysis – The Launch of M-Payment in DACH
6.1 Strengths
6.2 Weaknesses
6.3 Opportunities
6.4 Threats
6.5 Conclusion

7 Trend Outlook & Research Proposal – DACH
7.1 Research Limitation

8 Conclusion



Appendix 1.1 Trend Research Keywords

Appendix 1.2 SWOT-Analysis Summary


#mobilepayment #proximitypayment #alipay #wechatwallet #fintech #dachregion #china #comparison #trends #cashless #innovation #SWOT


I would like to deeply thank my parents for their patience and my grandparents for always having the best advice for every situation. Without their love and dedication, I would never be who I am today. A special thanks goes to my partner and best friend Moritz, he perfectly knows how to handle me in every emotional state and his support is priceless. I do thank you so much.


Purpose – To investigate and understand the trend of proximity mobile payment and its rapid development in China compared to the low adoption rate in Austria, Germany and Switzerland. The purpose of this paper is to further provide a base of information, organized in a SWOT-Analysis to indicate obstacles and to plan implementation and business strategies.

Design/methodology/approach – The companies, which serve as a base case are WeChat Wallet and Alipay, therefore they are examined precisely by desk and field research. Additionally, the markets of Germany, Austria, Switzerland and China are studied intensively. The author attended the Mobile in Retail Conference 2018 in Berlin, where she collected information during key notes of stakeholders of the DACH payment market. This analysis follows guidelines of information valuation and organization.

Findings – The results show that the market in the DACH region is far more complex than in China and divided by different technologies and providers of PMPS services. The innovation adoption needs to overcome several obstacles like missing alignments, unstandardized technologies and the vacantly ubiquity of proximity payment systems, thus cash is still the most used payment method in DACH. Moreover, m-payment systems are not perceived as trustworthy or secure. In general, the development of the market is detained by poor communication and confusion. However, China turned into an almost cashless society, though the payment market is fully controlled and monitored by the government and the monopoly of Alipay and WeChat.

Research limitations/ implications – A trend research needs a constant investigation of the trend development and the degree of change, thus permanent research needs to be done to constantly picture the current trend movement. This paper is limited to the status quo. It is not aiming to portrait e-commerce or e-banking in general.

Practical implications – With regard to the practical perspective, the cases of Alipay and WeChat may serve as profound examples of successful product launches and market positioning. Currently, the providers in DACH position their payment products without communicating the additional value to the customer. Therefore, their marketers should rework its marketing and education process to gain the users’ trust and to support the implementation. Additionally, an overall alignment of the payment structure could help to manage the users’ confusion.

Originality/Value – This paper summarizes and defines the reasons of the low implementation rate of the mobile payment trend in the DACH region, by providing a summary of the main issues and mistakes and the past development of the market by comparing its evolution with the successful Chinese market. Thus, this analysis helps executives to understand their barriers and to build new strategies for a successful product launch.

List of Figures

Figure 1: Dimensions of Mobile Payment

Figure 2: P2B Mobile Payment Solution Pillars

Figure 3: Proximity Mobile Payment Models

Figure 4: QR code Example

Figure 5: The NFC Payment Process via Smartphone

Figure 6: Variables influencing the Rate of Innovation Adoption

Figure 7: Attributes of Innovation Adoption

Figure 8: Trend Research Cycle

Figure 9: Trend Research Keywords

Figure 10: The Six Cultural Dimensions according to Hofstede

Figure 11: The Manifestations of Hofstede's Dimensions in DACH

Figure 12: Cultural Comparison Austria, China, Germany, Switzerland

Figure 13: WeChat Wallet Services

Figure 14: Alipay User Interface

Figure 15: Homeless with QR Code

Figure 16: Street Food Market & QR Code Payments

Figure 17: Innovation Diffusion Rate of PMPS

Figure 18: Why have you not used Mobile Payments in Stores yet?

Figure 19: Highlights of Mobile Payment Development in Germany in 2018

Figure 20: Google Pay and Apple Pay User Interfaces

Figure 21: Google Pay & Apple Pay List of collaborating Banks

Figure 22: PAYBACK PAY Payment Process

Figure 23: PAYBACK Pay Partners

Figure 24: Bluecode's User Interface

Figure 25: Mobile Payment Applications by Bank Institutions in Austria

Figure 26: Apple Pay in Switzerland – Collaborating Banks

Figure 27: Samsung Pay Bank in Switzerland – Collaborating Banks

Figure 28: Swiss Payment Provider Twint

Figure 29: SWOT-Analysis Definition

Figure 30: Top 3 Advantages of Mobile Payment

Figure 31: Duration of Checkout-Processes by Methods

Figure 32: Payment Card Ownership in Germany in 2008- 2017 in %

Figure 33: Preferred Mobile Payment Provider in %

Figure 34: SWOT-Analysis Summary

Index of Abbreviations

Abbildung in dieser Leseprobe nicht enthalten

1 Introduction

Exponentially developing technology accompanied by a wide scope of innovation in related fields, such as telecommunication or information technology, strongly impacting consumers’ lives (BAPTISTA, 2016, p. 1). Mobile business expands rapidly as the increasing number of Internet-enabled devices is creating an ecosystem with endless possibilities, in which Mobile-Commerce (m-commerce) portraits the majority of Electronic-Commerce (e-commerce) (RÜTER, 2018). Mobile Internet seems to be integrated into society, and can be inferred from the prevalence of mobile devices and especially the high penetration of smartphones (ibid.). Nowadays, smartphones are used as multifunctional tools to be used e.g. as a health tracking, gaming or organizational tool to simplify daily business (or life), while the usage for traditional phone calls has decreased (MATEMBA and LI, 2018, p. 1).

For this emerging ecosystem to survive as an organization, it seems, that it has become mandatory to implement new applications, inasmuch as technological innovation requires many actions and adaptions - in fact this need for innovation affects nearly every (online) business.

Moreover, the traditional financial industry does not fit the requirements of mobile business and has therefore experienced tremendous changes in the last decades (YAO et al., 2018, p. 1). The first major technological innovation seems to be mobile banking - the kickoff for the so-called Fintech (financial technology) revolution (LU, 2018, p. 40).

The implementation of m-payment has increased, not only since creditors and vendors realized its convenience and efficiency, but also since mobile banking integrated more services like ‘Instant SEPA’[1] payments to adapt to the rapidly developing m-commerce (HAHN and KODÓ, 2017, p. 1). Consequently, successful m-commerce requires mobile payment solutions (m-payment) and open mobile payment platforms, to improve processes significantly. These solutions e.g. PayPal[2] are dominating the m-commerce market and are very well known checkout processes (STATISTA, 2018c, p. 25). In pioneer countries like China, Sweden or Kenya m-payment is not only processing the m-commerce checkout – in those countries, so-called Proximity Mobile Payment Systems (PMPS) enable customers to pay with their smartphone in almost every physical store instead of paying with cash or their credit/debit card.

The Chinese government in particular is supporting the tech and finance industry and its development and establishment of a system that makes cash outdated and digitalizes the traditional wallet, leading to a rapid development of China into an almost cashless society within only a few years (CHINA-TECH-INSIGHTS, 2018, p. 10). However, the main reason is not the benefit to Chinese costumer, but the state rather aims to observe, track and control people’s expenditure (HÄRING, 2018, p. 10). Nevertheless, its convenience is easily described: People only need to carry their smartphone, because wallet applications simply replace their purses. The concept of the ‘Mobile Wallet’ is the inclusion of all functions of a real wallet, such as the storage of coupons, tickets and credit or debit cards (WALDMANN, 2014, p. 6f). Furthermore, the Chinese can use themselves with their imbedded IDs and driver’s licenses for identification purposes (HÄRING, 2018, p. 147). Although, the main focus is the ability to link to an m-payment system.

Due to China’s massive investment into Fintech innovations, the two biggest phenomena in the m-payment market are also based in China, called Alipay and WeChat Wallet (CHINA-TECH-INSIGHTS, 2018, p. 5; HÄRING, 2018, p. 148; LIU, 2015, p. 12f). Both companies are subsidiaries: while Alipay is a product of the Alibaba Group/ Ant Financial, Tencent Holdings owns WeChat – both dominating the Chinese market to an extent comparable to the supremacy of Apple and Google in western societies (STATISTA, 2018a). Surprisingly, neither Alipay nor WeChat Wallet are operating with a bank license, moreover neither is even a typical financial company. They are so-called Third Party Providers (TPP) offering the service of mediating between bank, customer and vendor by integrating customers’ bank account into their smartphone applications, generating a personalized Quick Response (QR) Code. The whole payment process is transacted within a few seconds- during which- either the vendor scans the customers’ personal QR code or the customer scans the code of the vendor (WALDMANN, 2014, p. 35ff). Therefore, m-payment can eliminate pain points like queues at the cashier or robbery. It must be mentioned, that all sensitive data is stored on the TPP server, which is, in turn, the crucial pain point for opponents of digital payments, since every transaction can be tracked.

In China, such m-payment processes have been used since Alipay launched in 2014 and expanded its business rapidly. Thus Alipay and WeChat, with their supposed positive image and governmental support, strongly penetrate the financial industry. In other countries, the market and its providers are fragmented and various in their offers, thus adoption on customer side has been low across solutions - mostly because of security issues and uncertainty about the offers that will prevail in the near future (PELLEGRINO and ZOMPETTI, 2016, p. 2). Interestingly, there is currently no successful m-payment solution offered by a bank, so it seems like the traditional bank institutions unintentionally lost track by missing adaption. Besides Alipay and WeChat, other TTPs offer constantly improving products, debasing banks’ reputations by taking advantage of their lethargy. Especially in western societies, m-payment services have not reached mass markets yet (ZHONG and NIEMINEN, 2015, p. 1) and remain under its critical mass due to negative network effects.

Despite this enormous trend in China and the fact that most of the world’s population has access to various options for making electronic payments instead of using cash, cash still persists (THOMAS et al., 2013, p. 1). Countries like Germany, Austria or Switzerland (DACH) are still very traditional in terms of payment methods (STATISTA, 2018c, p. 7). Compared to China, the mobile payment platforms in the DACH region are far more complex and mobile payment is still a niche solution; despite its high potential, a breakthrough cannot be expected soon (STATISTA, 2018c, p. 7). On this account, some factors that detain mobile payment growth are caused by multi-sided platform issues, because the market underestimates the impact of openness towards cooperation (ONDRUS et al., 2015, p. 3). Political and cultural reasons are slowing the implementation process so that, in the current state of affairs, customers e.g. in Germany can only choose between a few providers. Additionally, those few providers like Google Pay or PAYBACK PAY, Masterpass, Samsung Pay or “Sparkasse Mobiles Bezahlen” cannot be used plenary within the countries, which is detrimental to the solution. Apple Pay just started their service for German users in December 2018 (APPLE, 2018; STATISTA, 2018c, p. 6). Providers in Austria and Switzerland like Blue Code, kWallet, Twint or SwissWallet are structured in a comparable way, serving only as niche solutions (STATISTA, 2018b). Other main global players, offering m-payment services at a Point-Of-Sale (POS), are Samsung Pay, Apple Pay and Google Pay (STATISTA, 2017a). However, neither is fully operating in the DACH countries yet. Only a few other countries in Europe offer Apple Pay including Sweden, Spain, the United Kingdom and Ireland (KLEMM, 2018).

Even though, the QR code technology dominates the m-payment market in China, Apple, Google and other providers offer systems based on Near-Field-Communication (NFC) (GERPOTT and MEINERT, 2017, p. 2). The customer needs to choose between provider and technology, hence additional market complexity arises. Although, by facing a development towards self-service technology, in order to compete in the financial sector, it seems plausible to extend the trend to generate self-service payment applications in regions in which it is not fully implemented yet. The launch of an innovation or the introduction of a new product to the mass market requires pervious observation to guarantee the fit of the product and its strategy to the market. On this account, it is crucial to understand the environment and the culture of the countries.

This paper will be focusing on the transactions in local shops made through payment applications on customers’ smartphones, the so-called Proximity Mobile Payment Systems.

1.1 Research Background & Objective

Technological innovation is an alignment of many activities and decisions happening in a high number of discrete events. It is often a long process from the initial idea to the widespread use of a novelty, as the span of adoption can take months, years or decades. Every novelty performs a life cycle with different phases and within every phase of the development the definition of the innovation gets more specific and concrete (TORNATZKY and FLEISCHER, 1990, p. 27f).

In the 1950’s, the first cashless payment was introduced and since then, various e-payment instruments like SMS payment, Internet Banking, Plastic Cards (Debit, Credit and ATM Cards), Electronic Transfer (e-transfer), Virtual Currency (e.g. Bitcoin) or Mobile Wallet (e.g. Google Wallet) (JAIN and JAIN, 2017, p. 63) continue to contribute the formation of a payment infrastructure. Mobile payment could be the ‘Next Generation Payment’ and a one-of-a-kind innovation expected to bring along enormous changes in trade. Since it could simplify and fasten up the payment process, it should improve quantity and quality of mobile business as well as offline shopping.

In the context of the mobile business being characterized as an ever-changing industry and due to its high relevance, stakeholders of mobile business in DACH started in 2015 to annually meet for the ‘Mobile in Retail Conference’ (MiRC) to review and discuss the current developments of the market. Representatives of trade, banks, research institutes and IT present their new insights, products and opinions on the market. The GS1 Germany, the organizer of the conference, invited the author to attend the MiRC on October 17th and 18th 2018 in Berlin, where many discussions and statements depicting the current state of the market were accumulated.

Research and various studies have been conducted to investigate mobile payment solutions from different perspectives, which were then checked for coherency by comparing them to the latest statements of the conference’ participants.

The barriers of adoption are investigated by common technology adaption models (TAM, UTAUT, UTAUT 2) and by several scientists (BAPTISTA, 2016; DAHLBERG et al., 2008; HAHN and KODÓ, 2017) While many studies focused on China, Kenya or Scandinavia (Sweden, Denmark etc.) and various factors that might affect the market of mobile payment (DOTZAUER and HAISS, 2017; HAHN and KODÓ, 2017; MU and LEE, 2017, etc.), literature is lacking a trend investigation and analysis of the market and the structural differences in the DACH region compared to the pioneer country China. A transfer of the Asian development to the European context is not recommended due to the different cultural aspects and regulatory frameworks. GINNER (2017, p. 21) identified that none of the latest m-payment studies take neither cultural aspects nor any specific European regulatory frameworks in consideration, which describes another research gap.

In general, the implementation process of proximity mobile payment systems in Austria, Germany and Switzerland is studied deficiently, yet the situation is complex and should be restructured to support new strategy approaches – thus the DACH countries were considered in this thesis. The Chinese market is currently the furthest developed m-payment market worldwide, thus the products of Alipay and WeChat wallet were considered, as companies’ numbers can represent most Chinese m-payment users. Whereas Chinas development towards a cashless market is strongly supported by the government, cash is still the most used payment method in Germany, Austria and Switzerland. Thus, ‘proximity m-payment’ is still an evolving matter, strongly discussed by politicians, financial advisors and traders. Furthermore, adoption levels are very low and the m-payment infrastructure is far inferior to China’s (STATISTA, 2018c, p. 7ff). However, innovation should be trend-driven and constructed to fit tendencies towards formatting new markets and business fields (MASON et al., 2015, p. 8). Since the m-payment market is rather unexplored, it seems appropriate to analyze those trends and tendencies of the proximity mobile payment business. Therefore, the hypotheses and statements of participating experts of the MiRC are evaluated in this paper. Based on those results, new business strategies to enter and restructure the market are developed. The status quo is intransparent and confuses customers, which is one of the reasons for the low rate of adoption in DACH (STATISTA, 2018c, p. 8).

This paper focusses on the proximity m-payment process itself and the implementation in Germany, Austria and Switzerland and does not aim to portrait e-commerce or e-banking in general. It also considers contactless m-payment founded on the Near-Field-Communication (NFC) technology to investigate all trends of proximity m-payment, although Alipay and WeChat Wallet use a QR code system. The aim is to convert and investigate the trend of ‘proximity mobile payment’, which was originally detected in China, to the market in the DACH countries.

1.2 Research Structure

The theoretical framework is the part to begin with, in which mobile payment and all its functions are defined precisely. In the next step, the most popular online third-party payment solutions in China - Alipay and WeChat Wallet – are described in order to depict the features of the most successful m-payment providers as reference. Subsequently, this paper evaluates the current trends of the relatively new and unexplored m-payment market in DACH. Via a SWOT-Analysis, the impact on local economy and the overall efficiency of implementing mobile payment services in those countries will be examined.

On this account, the methodology of the preceding trend investigation of existing theories and backgrounds, which are responsible for the still immature development of the mobile payment infrastructure in the DACH region in contrast to China, is explained upfront. Even though, Germany, Austria and Switzerland share boarders, they face cultural differences, which may influence the adoption of novelties. Hence, these aspects are considered in a separate section. China’s payment structure serves as a template and provides the case scenario to compare other structures to. Consequently, the main part presents the collection of current studies, recent trends, which depict the market situation of mobile payment in DACH and its outcome in context with the discussions and hypotheses of the present experts at the MiRC 2018, which underlie the results.

2 Theoretical Framework

2.1 Mobile Payment Definition

Mobile payment services are defined as: “[…] payments for goods, services, and bills with a mobile device (such as a mobile phone, smart-phone, or personal digital assistant (PDA)) by taking advantage of wireless and other communication technologies” (DAHLBERG, et al., 2008, p. 165).

The mobile payment platform is open for a retail market, which is characterized first by a high quantity of competing providers such as banks or independent operators; second by various challenging groups of adopters, customers and merchants; and third, by issues regarding unification and consistency of payment systems (MALLAT, 2007, p. 2). All these factors substantiate the complexity of implementation. Mobile payment can be part of the m-commerce checkout process when a third-party payment method is integrated. The process does not require any additional steps such as paying online via laptop or PC. Furthermore, online-shops can provide a mobile application (app) and integrate m-payment into this app, in which customers benefit from a visually optimized and smooth shopping experience, while the process is not interrupted. Moreover, m-payment can enable the costumer to pay for products or services remotely or at the POS, for instance, by scanning a QR code, using contact information like e-mail or phone number or by proceeding with NFC. This service can be provided by downloading an app of a payment provider to a mobile phone (HENKEL, 2001, p. 2; KAHLMANN, 2013, p. 2f). Hence, the structure of mobile payment could be described as a grid; the x-axis “Participants” and the y-axis “Location”.

Abbildung in dieser Leseprobe nicht enthalten

Figure 1: Dimensions of Mobile Payment

(Authors’ graph based on KAHLMANN (2013, p. 2))

The locational dimension describes how the customer conducts his money transaction. For this, s/he has two options either via Internet (online/ remote payment) or offline (POS/ private). The y-axis characterizes the participants of the money transaction; thus, the payment is either executed via a Person-to-Person (P2P) or a Person-to-Business (P2B) relationship. P2P can also be described as a private transaction between people, while P2B includes a private person and a company. Combined with the locational dimensions, P2P involves either direct or remote payments. Accordingly, the participants are either sitting face-to-face (direct) or are situated beyond the reach of face-to-face communication (remote).

Within a P2B relationship remote payment describes m-commerce, while the focus of this thesis is on local P2B transactions, which are processed by Proximity Mobile Payment Systems (PMPS). In other words: Paying with your mobile device at a stationary business (KAHLMANN, 2013, p. 2f) and accordingly, PMPS is limited to process payments for goods at the POS via short-distance communication links.

Even though, mobile payment can be clustered into four dimensions, providers often operate in more than one dimension and offer Omni-Channel solutions to serve the whole market. Given this fact, the other dimensions are not completely disregarded in this paper, nevertheless the next section will further describe the solutions of the proximity m-payment systems.

2.2 Mobile Payment Services in the P2B Market – Overview

P2B transactions can be manifested in different ways. Figure 3 shows an overview of existing options, of how providers can position their product:

Abbildung in dieser Leseprobe nicht enthalten

Figure 2: P2B Mobile Payment Solution Pillars

(Authors’ graph based on (WALDMANN, 2014, p. 19))

All P2B providers can be classified accordingly. While Omni-Channel solutions like Alipay or PayPal focus on the supply of mobile money transactions through multiple channels, providers of a Mobile Wallet offer an extensive product to replace a traditional purse.

Besides the storage of payment credentials, users can add coupons, tickets, vouchers, reward passes etc. to their wallet application. The most common, international solutions are Apple Wallet, WeChat Wallet and Google Wallet. The missing alignment of product designation aggravates an assortment overview or the clustering of providers. Some providers like PayPal only support money transactions and still claim to be a wallet application (PAYPAL, 2019). This issue might be caused by the fact, that m-commerce emerged out of e-commerce, hence most m-payment systems were initially designed and named to fit the e-commerce market and later on adapted to m-commerce, whereas the market for m-payment at the POS arose only recently. Within this paper the term m-payment does not exclude Mobile Wallets.

Since, mobile payment has many different aspects, from now on the term ‘mobile payment’ or ‘m-payment’ (if not mentioned any differently) is used in the sense of ‘proximity mobile payment’ to clarify and ease reading.

2.3 Proximity Mobile Payment Platform– Business Models

“A platform is defined as a set of stable components that supports variety and evolvability in a system by constraining the linkages among the other components (ONDRUS, et al., 2015, p. 2).” Mobile payment is built around a multi-sided platform, challenged to create conditions that supports network effects to reach a critical mass of users. This implicates a profound reach of m-payment for both merchants and customers. The m-payment platform can be divided by three levels; provider level, technology level and user level and therefore products can be open towards cooperation or collaboration on those three levels (ONDRUS, et al., 2015, p. 17ff):

- Opening the provider level: Providers share control and create inter-industry firms (e.g. two bank intuitions share on m-payment product and provide it for both customer bases)
- Opening the technology level: Providers enable to interoperate on the same system to support ubiquity (e.g. Android allows open access to use the smartphone integrated NFC chip; the NFC terminal accepts every device, credit or debit card)
- Opening the user level: Providers, bank institution, and smartphone manufacturers collaborate to open their product for multiple customers (e.g. Google Pay collaborates with Samsung, Huawei etc. and MasterCard, Visa, local banks etc. to create an open user level)

Out of that, four most common models of mobile payments in the P2B market arose and are based on different operators. Banks, Independent Service Provider (ISP) or Mobile Service Provider (MSP) are potential intermediaries and can connect the customer with the vendor. All of them want to benefit from the easy use of mobile phone functionalities and try to adopt the functions of m-payment in the best possible way (CHAIX and TORRE, 2011, p. 2).

As of now, the following four models seem to compete for the most used method (CHAIX and TORRE, 2011, p. 5; SMARTCARD, 2008) (Figure 4):

- The Bank-Centric Model: a bank is the central node of the model and deploys the required capability at the POS for the merchants and further manages the transactions and distributes the property rights.
- The Operator-Centric Model: the mobile operator independently deploys all necessities comparable to the Bank-Centric-Model.
- The Collaborative Model: financial intermediaries and mobile payment operators collaborate and share the deployment of the managing tasks and cooperatively the proprietary rights.
- The Independent Service Provider (ISP) Model: “a third party of confidence operates as an independent and ‘neutral’ intermediary between financial agents and operators (CHAIX and TORRE, 2011, p. 5)” and provides a secure platform.

Abbildung in dieser Leseprobe nicht enthalten

Figure 3: Proximity Mobile Payment Models

(Authors’ graph based on (CHAIX and TORRE, 2011, p. 5))

This overview clearly shows the many options and difficult circumstances of the m-payment market. Of course, no single business has a ‘one-size-fits-all’ solution and all of these models have their advantages and disadvantages, which need to be discussed further. It is important to see these models in the full context of the market and, to investigate the potential fit for the market’s situation. In some countries, it might be practical to put effort into the implementation of a model, in which the bank involvement is high, e.g. when it is culturally established to trust the bank, whereas it would decrease the chance of success to try the same tactic in a different country, in which the bank’s reputation is low.

However, as the focus of this thesis is based on the example of China, where it is trend to release the payment by TPPs/ISPs, this model is considered the most important – supplemented by a short notice of the Collaborative Model, as it is highly relevant for the DACH region. Nevertheless, CHAIX and TORRE (2011, p. 3ff) did an excellent overview of all four models, which is recommended for further research.

Some years ago, payment transactions in e-commerce were commonly completed with credit cards, which often resulted in identity theft or online fraud, so that TPP solutions were initially invented as checkout processes to extend accepted payment methods in the e-commerce and later on in the m-commerce market. ISP or Third-Party-Payment solutions are offered by non-financial institutions as payment services, connecting buyer and seller on a neutral and secure platform. Thus, providers mediate between both parties to reduce e.g. credit risks, identity theft, fraud or trust issues (YAO, et al., 2018, p. 1).

The Collaborative Model involves more players, as it requires an additional NFC reader, thus an additional provider. On the one hand, all partners charge fees from merchants for renting the device or mediating between parties, which might lead to a higher investment (CHAIX and TORRE, 2011, p. 17). On the other hand, most card reader devices are already NFC enabled, which could ease the implementation process. This model is therefore explained in the next chapter.

The fragmentation of the market and its various solutions cause obscurity, (PELLEGRINO and ZOMPETTI, 2016, p. 2) leading to a failure of all players to agree on a viable economic model or even a consistent definition of m-payment. In addition to the choice between payment models, PMPSs can also be based on different technologies, increasing the level of market complexity.

2.4 Proximity Mobile Payment – Technologies

The procedure of a successful m-payment transaction requires four steps: the payment is completed through Connection, Authorization, Money Release and Approval (WALDMANN, 2014, p. 34). Indeed, technology has an enormous impact on efficiency and operability; while the connection and authorization occur on the Users’ Interface (UI), money release and approval are backend processes, which cannot be influenced by customers. In particular, excellent user experience can mostly be based on the technology of connection and authorization, as they are under the users’ control. Correspondingly, the choice of the right system is crucial for overcoming implementation barriers of m-payment systems, hence the most common technologies are currently based on NFC or QR codes. Nevertheless, m-payment transactions at the POS can also be executed by e.g. the Bluetooth technology or barcode scanning and other methods, which are more likely to be irrelevant for the market (GERPOTT and MEINERT, 2017, p. 3). As the center of this research’s objective focuses on depicting and comparing China and the DACH region, the next chapter describes the technology of the QR code and the NFC system.

2.4.1 QR Code Technology

Back in 1994, Denso Wave developed the first Quick Response (QR) code in Japan, with the purpose of supporting the automotive supply chain. But marketers and advertisers became aware of the potential of the QR technology to bridge offline advertising to multichannel online marketing (DENSO, 2011, p. 1ff). Consequently, QR codes appear in a lot of different contexts: a pedestrian scans a code on advertising columns to get connected to e.g. online campaign sites or a shopper scans it in a supermarket to sign up to a loyalty program. In terms of the topic of this thesis, WeChat Wallet and Alipay enabled shoppers to also pay with a QR code (Figure 5 in (DENSO, 2011, p. 1)) at the POS.

“The Quick Response (QR) code is a black-and-white, two-dimensional matrix code which is an advanced type of machine-readable label, often referred to as barcode. A QR code consists of black squares arranged in a square grid on a white background, which can be read by an imaging device such as a camera or scanner. The required data is then extracted from patterns that are present in both horizontal and vertical components of the image. Compared with the original one-dimensional barcode, this QR code is able to contain much greater amount of data in a smaller space and it can be read more reliably with very high speed (KONGARCHAPATARA, 2018, p. 3).”

Abbildung in dieser Leseprobe nicht enthalten

Figure 4: QR code Example

The payment process can be executed in two ways; either the code is generated by the vendor at the POS terminal and scanned with the smartphone camera of the customer or vice versa. Either way, both parties require optical scan functionalities. Even though QR codes are widely applicable, in the US, for instance, only 17.1 % of interviewees scanned a QR code in 2011 (ibid.). To date, the involvement is still very weak, compared to the omnipresence of QR codes in China, where WeChat and Alipay helped to emphasize its glory. In 2017, more than 50% of Chinese population used cash for only a maximum of 20% of their monthly spending (CHINA-TECH-INSIGHTS, 2018, p. 12), while, most other transactions were executed by m-payment or credit card systems.

2.4.2 NFC Technology

In analogy to western societies, where the QR code usage is trivial, the near field communication (NFC) technology could be described as the most appropriated technology, underlying PMPS. NFC technology is widely accepted by trade, as most credit cards and credit card readers, e.g. in DACH, are already equipped with it. Thus, the well-established infrastructure is an appreciated advantage (RÜTER, 2018, p. 7).

Radio frequency identification (RFID) technology is the basis of NFC and be characterized as a tool to identify items by using radio waves, whereas NFC is the more secure format, designed for data exchange in particular (TRASHER, 2013). An RIFD system consists of an antenna, a reader and an active or passive tag: the “reader sends an interrogating signal to the tag via the antenna, and the tag responds with its unique information (TRASHER, 2013).” By using an active tag (which means that it contains its own power source), the broadcast range can be expanded up to 100 meters. The passive tag gets activated by the transmitted electromagnetic energy of the reader, which can bridge a range of approx. 25 meters (ibid.). RFID tags are available in multiple application formats built into identity documents, bank and customer cards or employee identity cards, which can also serve for time tracking. The cost per tag is marginal, as the price is only a few cents each (ibid.).

NFC, as well as RFID, connects two units by using the same radio frequency, but is distinguished by the fact that the frequency of NFC is of short range, limited to a distance up to 10cm (CURRAN et al., 2012, p. 371). Thus both “devices must be in close proximity to each other (TRASHER, 2013)” and because of that, it is more difficult to intercept the exchange of data, which makes NFC “inherently secured from most types of remote attacks (CURRAN, et al., 2012, p. 381).”

It is common in the DACH countries to pay with a credit card, which contains a passive NFC chip. Therefore, instead of inserting the card, the customer just approaches the payment device and authorizes the transaction. The NFC logo (Figure 6) indicates retailers who accept this payment method (BEZAHLEN.DE, 2019).

Unlike RFID, where the active chip singly sends signals, an active NFC chip further has the ability to also read a signal, and accordingly, an active NFC chip inside a smartphone enables the device to send and receive data (CURRAN, et al., 2012, p. 371). Moreover, the sensitive data can be stored in different secure elements for instance in a cloud, the chip itself or the SIM card. The type of storage is irrelevant for the process of the transaction, but is incumbent upon the providers (GERPOTT and MEINERT, 2017, p. 2).

The process for m-payment transactions is comparable to the process with an NFC credit card: the merchant enters the amount to be paid in the NFC enabled payment device and afterwards the customer approaches his/her smartphone close to the reader. Then the customer authorizes the payment, for instance by entering a PIN, by using his/her fingerprint or other authentication methods to validate the transaction (PELLEGRINO and ZOMPETTI, 2016, p. 3). Nowadays, Apple and Google provide all of their current and upcoming devices with NFC to encourage the customer to use their payment systems (GERPOTT and MEINERT, 2017, p. 2). This development indicates the trend towards m-payment systems in western companies, but to further investigate the market development it is important to understand the characteristics of trends and innovations.

Abbildung in dieser Leseprobe nicht enthalten

Figure 5: The NFC Payment Process via Smartphone

(ELEMENTS, 2019; GOOGLE, 2019)

2.5 Anatomy of Trends & Innovation Adoption

In the world’s society, trends appear in all kinds of markets and can be defined as a pointing direction of a statistically recorded time series (UNIVERSITÄT-LINZ, 2019). A trend is not only a fashion style, a tech gadget or a novel product. Trends also appear in behaviors or mindsets. Further, the shift towards a new direction can develop into a short or long term, a micro, macro or mega trend (DRAGT, 2017, p. 36ff). Ongoing global forces, the underlying wants and needs of society and its manifestations are the three main elements a trend integrates (ibid.). Therefore, the key variables are the direction of change and its forces, but a trend is usually first manifest in certain groups or cultures with certain kinds of values and needs. A trend is unpredictable, extremely influenced by external factors and thus limited in validity, as it can only represent a specific period (UNIVERSITÄT-LINZ, 2019). Accordingly, trends need to be specified and have a reference value to describe their expansion and progression. As an example of a relevance value to verify the trend of ‘economic growth’, the GDP can be mentioned (HEINRICH et al., 2012, p. 2). Aside from that, the most considerable fact economists and researches need to have in mind is that the future is unpredictable. And yet, the better an economist understands the background and environment of a trend, the better s/he can forecast and define its drivers (ibid.). Moreover, trend insights are essential to any innovation process and serve as a foundation for future concepts and changes to improve people’s quality of life (DRAGT, 2017, p. 5).

Innovation is defined as “generation, acceptance and implementation of new ideas, processes, products or services (THOMPSON and HOUSE, 1965, p. 2).” It seems plausible that a novelty is easier to implement in an already established and stable market, as the product might be unstandardized or faced by unexpected issues and therefore needs to be readjusted to better fit market needs. VERNON (1966, p. 307ff) developed the theory that once the above mentioned issues are solved, the product can also be introduced or even produced in less-developed countries.

Trend research should have a global scope in general. Yet, and maybe because of Vernon’s theory a lot of professionals mainly focus on western cultures. While his statement may still apply in some economic structures, the role of a still less-developed country such as China, as a frontrunner in the implementation of m-payment technologies has recently refuted this theory. Thus, PMPSs could turn into a mega trend, despite the fact that Western societies struggle with its adaption. Several recent studies (BAPTISTA, 2016; DOTZAUER and HAISS, 2017; HAHN and KODÓ, 2017; RÜTER, 2018) have analyzed the factors which influence the adoption of PMPSs in DACH. ROGERS (2010, p. 207ff) introduced a common model (Figure 8) that defines, which factors influence the innovation adoption.

Abbildung in dieser Leseprobe nicht enthalten

Figure 6: Variables influencing the Rate of Innovation Adoption

(Authors graph based on (ROGERS, 2010, p. 207))

It is crucial that “[t]he receivers' perceptions of the attributes of an innovation, not the attributes as classified by experts or change agents, affect its rate of adoption (ROGERS, 2010, p. 209).” ROGERS (2010, p. 207ff) categorized his variables into four pillars, to better identify those patterns. The ‘Communication Channel’ pillar contains the method to spread the idea, the more complex the novelty is to define, the stronger the interpersonal communication with the people, who are supposed to adopt the idea must be, thus the level of marketing effort is pictured in this pillar. The decision of implementation is more likely to be in favor of the innovation if the person in question feels like s/he has an individual choice. Hence, the cultural and social systems in which the people live in, is strongly influencing the adoption rate, which is why precise analysis of these systems in the countries relevant for this paper are conducted in the next chapter. Additionally, he describes five attributes of an innovation, which are mostly responsible for the overall impression of the novelty:

Abbildung in dieser Leseprobe nicht enthalten

Figure 7: Attributes of Innovation Adoption

(Authors‘ graph based on (ROGERS, 2010, 207ff))

In fact, that there are many aspects affecting the environment of an innovation, nevertheless, the four pillars defined by ROGERS (2010, p. 207ff) are well established and give a good holistic overview of the novelty’s characteristics and surroundings. Several studies have already been conducted using those factors of adoption to investigate the PMPS development in the DACH countries (BLÖCHLINGER, 2012; DOTZAUER and HAISS, 2017; ONDRUS and PIGNEUR, 2006), which will be discussed in a later section.

In conclusion, all these variables, which influence the implementation of an innovation need to be tracked and validated permanently. Innovations are exposed to constantly changing trends of the market, and therefore to desires of customers, while correspondingly the acceptance of a new product is difficult to predict. Accordingly, economists and marketers should study the market or country constantly and intensively, hence a trend investigation could be an ideal method to identify patterns, which could advance the implementation process.

3 Methodology

3.1 Concept of Trend Investigation

For an understanding of those trends and changes and to make educated suggestions on how to deal with various scenarios for the future, it is crucial to design a solid concept of the investigation in a structured manner. This concept is a cycle of three phases with different goals (Figure 10):

Abbildung in dieser Leseprobe nicht enthalten

Figure 8: Trend Research Cycle

(Authors’ based on (DRAGT, 2017, p. 53))

Indeed, these phases are applicable to many kinds of research; however, within foresight studies the execution process is more likely a cycle of those three steps, as trends could change permanently. The first one of this method is the discovery of the earliest signs of change by scanning the environment. In a second step, the collected information needs to be analyzed and clustered, so that upcoming trends can be validated and specified. The last step leads to actions and innovation, due to the application of the results as they are put in the context of the field, the market and the culture (DRAGT, 2017, p. 53).

The recognition of trends requires intensive research, and while there are many applicable tools, most can be categorized into field or desk research. The triangulation of methods and tools guarantees the best outcome (ibid.). The author’s attendance of the MiRC in 2018 can be classified as field research; the analyzed studies, blogs or newspaper articles are part of the desk research. Nevertheless, the selection of information to constitute this development is curated and the scope is limited to the trend of PMPSs in DACH and the assemblage of China’s practical knowledge. Moreover, the method of this foresight analysis has a qualitative and systematic approach. Thus, this paper is based on both exploratory and descriptive research detecting variables which influence the usage of PMPS. Later on those variables are systemized in a SWOT-Analysis. Therefore, it identifies related trends and patterns in the DACH region. Additionally, the investigation is balanced between rational and emotional aspects of innovation adoption, thus cultural variables are as important as business or governmental facets of the countries.

The part of field research and trend exploration was during the Mobile in Retail Conference 2018 in Berlin, while the author conducted several statements of market experts and attended their presentations and key notes. Accordingly, the collected data can be classified as very recent and accurate, as stakeholders and companies of all involved fields advised the executives and presented their status, opinions and estimations.

The start of the desk research occurs by means of the search engine of Google and its subsidiaries Google Scholar, Google Books and Google Trends. Furthermore, the scientific databases ResearchGate, ScienceDirect, EBSCOhost and DBIS are the sources of the evaluated studies, journals and articles. The relevancy of information was evaluated by the date of publication (newest releases) and the authenticity, the reputation and trustworthiness of the conductor or webpage. The variables are measured very precisely by the author’s objective and the sources and databases are furthermore licensed by universities and academic institutions (HAW-HAMBURG, 2019). The below mind map lists the keywords for discovering the underlying data and sources of this thesis:

Abbildung in dieser Leseprobe nicht enthalten

Figure 9: Trend Research Keywords

(Authors’ graph, see: Appendix 1.1 Trend Research Keywords)

Additionally, the references of the selected papers and articles were searched in order to identify further studies or correspondences. The collection thus builds a profound fundament for depicturing the PMPS market of China and the DACH region. A side effect of this comprehensive trend research is the amount of conducted and cited reference, which serves as an indication of the extent. Afterwards, the outcome of this investigation was clustered in a SWOT-Analysis, to manage the collected information. Therefore, the underlying principles of the SWOT method are explained below.

3.2 Concept of SWOT-Analysis

The SWOT-Analysis is a common model for organizing significant factors and possibilities of markets, companies and products etc., which determine their future development. The term ‘SWOT’ is an acronym, in which the analysis is constructed like a grid out of four fields, thus each letter or field represents either the Strength, Weakness, Opportunities or Threats of the discussed subject (SCHUMANN, 2012, p. 4). The identification of strengths and weaknesses considers the product itself, while opportunities and threats categorize external factors into positive and negative variables (PHADERMROD et al., 2019, p. 197f). The basic technique of this paper is research and brainstorming, through the rational organization of information. In foresight studies the focus is on factors, which may potentially occur in the future, “whereas the already existing factors should be a subject of planning and programming activities with fairly short time perspective (NAZARKO et al., 2017, p. 483).” The categorization improves the designation of directions, supports technology assessment and draws an overview of the market. Moreover, a SWOT-Analysis maps the key variables of success and vulnerabilities of the studied product, thus the outcome is collaborative and scalable (NAZARKO, et al., 2017, p. 485).

Both, strategies and concrete actions can be derived to be utmost successful under the given conditions. These strategies can be divided into four categories; strategies from Strengths and Opportunities, the SO strategy or from ST (Strengths and Threats), WO (Weaknesses and Opportunities) and WTS (Weaknesses, Threats and Strengths) strategies, which are the most common models based on the SWOT-Analysis (HOFSÄSS, 2015). The ideal model depends on the circumstances and the product.

An additional enhancement of the results takes the change of importance level in consideration. Therefore, the SWOT factors were further grouped by two classification criteria (NAZARKO, et al., 2017, p. 487):

1. Factor occurrence in time (existing vs. potential)
2. Factor significance in time (currently significant vs. significant in the future)

The strategy includes pointing towards drivers which are currently insignificant or do not occur in the present but may become interesting over time. Moreover variables, which seem to strongly influence the status quo, may become irrelevant in the future.

4 Status Quo & Trend Investigation – China vs. DACH Region

4.1 Cultural Aspects

In general, countries and cultures deal with innovations differently and although many variables influence the adoption, the impact of the social and historical background, which varies between different societies, is crucial.

Prof. Dr. Geert Hofstede might be one of the most famous conductors of cultural researches and investigations. His model of ‘The Six Dimensions of National Culture’ is highly recognized in many collected studies and is cited multiple times in various publications (GOOGLE-SCHOLAR, 2019), hence this thesis applies his approach to identify cultural differences. For HOFSTEDE (2011, p. 3), "[c]ulture is the collective programming of the mind that distinguishes the members of one group or category of people from others". As another approach, the one by GODIN (2018, p. 12) can be mentioned, in which culture can be simplified as the thought of “[p]eople like us do things like this”. The belief in status defines the heart of every civilization (GODIN, 2018, p. 12), therefore people use certain status roles to express themselves and show that they belong to their culture. The six different dimensions of national culture ensure a better understanding of those beliefs and needs. But “culture can only be used meaningfully by comparison (HOFSTEDE-INSIGHTS, 2019)” and thus those dimensions distinguish countries from each other. To enable comparison, every country receives a specific score per dimension. These are defined in Figure 12 below.

Abbildung in dieser Leseprobe nicht enthalten

Figure 10: The Six Cultural Dimensions according to Hofstede


In general, all rankings score from 0 to 100 and according to Figure 12 the first Dimension ‘PDI’ is described as unequal by a ranking of 0 points and as equal by a ranking of 100 points. An individually thinking society scores 100 in ‘IDV’, while collectively connected citizens get 0 points. Masculinity is described by a score of 100 points and femininity by 0 points. A society, which avoids uncertainties earns 100 points in ‘UAI’ and 0 points, by being more open minded towards novelties. Long term oriented countries rank higher (100 points) in ‘LTO’ as short term oriented countries (0 points). An indulging society scores 100 points in ‘IND’, while restraint societies score 0 points.


[1] Acronym: Single Euro Payments Area. Uniform standards apply to this Euro Payments Area, simplifying the execution of money transfers and direct debits between the participating parties. ‘Instant SEPA’ describes real time money transfers, releasing the money instantly (MOLL, 2018).

[2] No1 International payment solution provider in Online Shopping (STATSITA, 2018b)

Excerpt out of 167 pages


Launching mobile payment systems in the DACH region. A trend investigation and SWOT analysis based on examples of Chinese providers
Catalog Number
ISBN (eBook)
ISBN (Book)
app, e-commerce, m-commerce, mobile commerce, m-payment
Quote paper
Denise Gaber (Author), 2020, Launching mobile payment systems in the DACH region. A trend investigation and SWOT analysis based on examples of Chinese providers, Munich, GRIN Verlag,


  • No comments yet.
Read the ebook
Title: Launching mobile payment systems in the DACH region. A trend investigation and SWOT analysis based on examples of Chinese providers

Upload papers

Your term paper / thesis:

- Publication as eBook and book
- High royalties for the sales
- Completely free - with ISBN
- It only takes five minutes
- Every paper finds readers

Publish now - it's free