The mobile payment market is projected to reach nearly 2.5 billion users in the Chinese market alone by 2025. Alibaba’s Alipay and WeChat Pay remain dominant, securing almost 95 percent of the Chinese mobile payment market. Currently, these two major mobile payment companies are exploring usage scenarios overseas.
Prior to the COVID-19 pandemic, between 2016 and 2019, there were roughly 3 million annual travelers from China, each spending an average of $6,500. For European countries, this number more than doubled. While the number of Chinese travelers decreased in 2020 due to the pandemic, we anticipate a significant recovery in the upcoming years. Mobile payment technology, although decades old, has been seamlessly integrated into the lives of the Chinese populace, ahead of the rest of the world. This is partly due to the absence of a robust credit card infrastructure in China. However, the thriving mobile payment market signals vast global opportunities.
The pandemic accelerated the adoption of contactless payments. Americans have shifted towards contactless payment methods like Apple Pay, PayPal, and Venmo, prioritizing safety. This trend presents a golden opportunity for QR-based mobile payment acquirers like Citcon to expand in the US market. Yet, Citcon grapples with entrenched consumer habits. Unlike the Chinese, Americans often spend money upfront. The prevalent use of credit cards stems from the added benefits of credit loans, cashback, and rewards. To effectively alter consumer behavior, Citcon, along with other mobile payment platforms, needs strategic initiatives that go beyond simplifying transactions.
Citcon is a leading global payment platform offering a unified API solution, empowering merchants to integrate over 200 payment methods. To date, Citcon has partnered with over 20 global wallet providers, including PayPal and Venmo. They have assisted more than 10,000 global merchants, securely processing millions of daily transactions. Citcon firmly stands as the market leader for QR-based mobile payment acquisition in the US.
While Venmo and PayPal are significant players in the global payment platform realm, their focus leans towards online transactions rather than routine retail transactions. Over the past two years, Citcon has collaborated with PayPal, Venmo, and Klarna. As Citcon's reach grows, its clientele isn't limited to Chinese travelers in the US. They are developing QR-based backend technology for merchants. With installed QR codes, customers can directly process payments via these codes into the Point-of-Sale (POS) system. This flexibility allows consumers to select their preferred mobile wallet for transactions, granting merchants a higher conversion rate and reduced transaction failures. Citcon's CEO, Huang, revealed that the company's annualized payment volume approached $1 billion by the end of 2021, marking a 300% YoY growth.
TSVC prioritizes seed-stage investments, adhering to the "Three Pillars" framework. This rigorous evaluation and scoring mechanism assesses a company’s market, technology/product, and team. TSVC's investment in Citcon in February 2018 highlights the firm's value-add investor reputation.
The foremost evaluation criterion is the founding team. Citcon boasts a stellar team with significant IT industry experience. Chuck Huang, the CEO/Founder of Citcon, has over a decade of software engineering experience at Visa, eBay, and Oracle. During his tenure at Visa, his primary focus was on the mobile payment gateway (Apple Pay Integration), Cloud-Based Payment Services, and Real-Time Transaction-based Loyalty Offer Product. This expertise laid the foundation for Citcon. Wei Jiang, Citcon's President & COO, has been pivotal in strategizing, sales, and product development at giants like VISA, MasterCard, and Symantec.
The second "pillar" for evaluation is market potential. Chinese overseas spending on the QR market in North America and Europe is estimated at about $100B. At a 1% take rate, Citcon's total available market ranges from $1-2B. As a potential market frontrunner, Citcon might generate $200-300M in revenue, capturing a 20-30% market share.
The final assessment focuses on product/technology. Citcon designs and deploys POS systems compatible with Chinese digital wallets and coupon redemptions. Presently, they have integrated over 100 digital wallets and credit card providers and have on-boarded more than ten thousand merchants. Their first-mover advantage has solidified their industry leadership.
Given their seasoned team, flourishing market, and advanced technology, TSVC is optimistic about Citcon's immense potential.
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