China’s Mobile Payments Market, simply upwards.
China is steadily marching toward a cashless society, enabled by Alibaba’s Alipay and Tencent’s WeChat Pay. Those two leading payment systems have introduced QR code-backed payments into the daily habits of consumers. Proximity mobile payments are now ubiquitous for purchases in apparel stores to supermarkets to convenience stores.
How many people in China use proximity mobile payments?
Proximity mobile payment users in China grew by 10.0% in 2019 to reach 577.4 million (by far the largest in the world). While 81.1% of smartphone users use proximity mobile payments, penetration is much lower (49.6%) among the overall population, meaning this market still has room for further growth.
What are the leading proximity mobile payment service providers in China?
Alipay, owned by Alibaba affiliate Ant Financial’s Alipay continues to remain the leading force in Chinese mobile payments, with a 54.5% market share, whilst Tencent comes in second on the back of its WeChat Pay platform, with a market share of 39.5%
Why are proximity mobile payments so popular in China?
Two primary factors have led to consumers in China embracing mobile payments; 1) China is a mobile-first market, meaning most internet users’ first device was a mobile phone; 2) Credit card ownership was low when mobile options Alipay and WeChat Pay were first introduced.
What are the opportunities for more adoption of proximity mobile payments?
It is worth noting that even in China, the mobile payments revolution is far from complete. Importantly, rural China has yet to join the digital transformation. A 2016 study found that 46 percent of respondents in northwest rural China had a smartphone, but that only 11 percent of respondents had tried mobile financial services. While these numbers are improving, Alipay and WeChat Pay will need to adapt their approaches if they are to have success in rural areas. The challenges to convert those groups to switch to a mobile payment system will require consumer education, product adoption and infrastructure investment.
Effect of the new digital e-RMB
The Chinese government has been testing out its new government-backed digital currency as a pilot program in Shenzhen, Suzhou, Chengdu, and Xiong’an. The e-RMB represents a digital yuan that is backed by the government and is stored in a digital wallet instead of a bank account and will be competing with other digital currencies already used in China
One of the reasons for this new digital currency push could be a chance for the government to oversee and have greater oversight on mobile app purchases & transactions. Chinese government also does not want monopolization of digital currencies by tech giants. Last year, People’s Bank of China Governor Yi Gang said: “Those big tech companies bring to us a lot of challenges and financial risks … You see: In this game, winners take all, so monopolies are a challenge.”
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