Overview - Mobile Payments Market In China
Powered by the rapid and widespread adoption of online retail, financial and on-demand services, China is experiencing a boom in its mobile payment market. Between January 2017 and October 2017, there were $12.8 trillion worth of mobile payment transactions in China. Chinese people are using mobile payment services to pay for everything from smartphone game upgrades and food delivery to movie tickets and electronics.
Research firm eMarketer estimated that 61 percent of all global mobile payment transactions in 2018 would be from China. The firm also estimates that 79.3 percent of Chinese customers would be using mobile payments at point-of-sales by 2021.
As per the market shares in 2016 Q4, the most popular payment options in the Chinese market are:
Launched in 2004, Alipay is an e-wallet with QR code payment option that is used on the Taobao and Tmall websites, the most popular Chinese online marketplaces. As of 2016 Q1, this platform had 400 million users. It provides scanning options for customers and merchants as well as soundwave payment options. The e-wallet is connected to the credit card account or pre-deposited money of the user. Its features include peer-to-peer payment, digital storage of documents and cross-border payments.
Launched in 2014 by Tencent, it is an e-wallet with QR code payment option that provides payment by scanning options for customers and merchants. As of 2016 Q1, this platform had 300 million users. The e-wallet is connected to the credit card account or pre-deposited money of the user. Its features include digital gaming currency, wealth management, in-app access to e-commerce sites and payment of tips to content creators.
* Other payment methods include 1qianbao (2 percent), Union Mobile Financial Pay (1 percent), LianLian Pay (1 percent), Baidu Wallet (less than 1 percent), Union Pay (less than 1 percent), YeePay (less than 1 percent) and 99Bill (less than 1 percent).
It is a near-field communication (NFC) based mobile payment system launched in 2016 by Apple. Apple Pay has yet to capture a significant market share in China. As of 2016 Q1, this platform had a little more than 38 million users in China. The main method of payment is by placing the Apple device on top of the point-of-sale (POS) terminals. This service is available in only selected regions of China.
* With a share of almost 58 percent, e-wallet services dominate the mobile payment market. Due to government regulations and security concerns, most of the payment options are either based on near-field communication (NFC) technologies or QR code technologies. NFC technologies require the user to scan their phones at specific POS terminals only.
* During the Chinese New Year, many of the payment platforms launch peer-to-peer payment features that allow the users to send the traditional red envelopes with cash to their family and relatives. In 2016, WeChat delivered 8.08 billion digital red envelopes. During a broadcast of the China Central Television’s Spring Festival Gala, an annual TV event watched by an estimated 700 million people, the Tencent app encouraged the viewers to shake their phones for a chance to win a combined $80 million in red envelopes from corporate sponsors.
* Beginning in 2018, the People’s Bank of China (PBOC), the central bank, will require all electronic and mobile payments to go through a new central bank payments clearing platform, called Wanglian. This system has been established to check the capital outflows and monitor transactions for money laundering and fraud.
* The e-wallets like WeChat Pay provide different features like digital gaming currency, option to split bills amongst friends, pay phone and utility bills, connect with strangers by shaking the phone and access various e-commerce sites in-app.
* Mobile payments are also being used to pay at offline stores through the "scan-and-pay" method. According to China Channel, over 90 percent of Chinese consumers use mobile payment methods to pay for offline purchases, as compared with only a 32 percent adoption rate for debit and credit cards.
* Many e-wallets also allow the users to send micro-payments to content creators like writers, musicians, and artists as tips for their services.
* Many e-wallets like Alipay allow the user to digitize and store their bank or credit cards and other important documents like the identification card, driving license and property deeds.
In conclusion, the significant mobile payment options in China are Alipay and WeChat Pay. The unique features of the Chinese payment marketplace include payments through e-wallets and the ability to send red envelopes and tips to other users.