China is a pioneer and early adopter of mobile payments. Over the last few years AliPay and WeChat Pay have revolutionized the retail landscape in China. People would rather pay with their phone than other methods. But why?
China has also seen an increase in cross-border payment transactions, primarily due to growth in sectors such as eCommerce, travel and overseas education. Frost & Sullivan recently reported that nearly 65% of Chinese tourists have used mobile payments abroad, approximately six times higher than the average non-Chinese traveler.
“In China, eCommerce is a powerful incentive for users to purchase smartphones that enable mobile payment features. The social aspect that mobile payments brings can serve as an integral step in building trust and learning about digital services, especially in rural communities,” said Ms Mei Lee Quah, Industry Principal Analyst, Information & Communication Technologies (ICT) Practice, Digital Transformation at Frost & Sullivan.
The market of mobile payments services in China is expected to grow at a compound annual growth rate (CAGR) of 21.8% from 2017 to 2023, growing three-fold from US$29.93 trillion to US$96.73 trillion. The total number of active mobile payment customers is expected to reach 956 million by 2023 from 562 million in 2017 which will attract additional investments from mobile payments market participants.
The Chinese market for mobile payment offers not only market opportunities for solution providers intending to operate within the domestic market but also learning points for global mobile payment solution providers. Chinese consumers increasingly would rather pay with their phone than other methods and the lessons learned from the Chinese market can offer insight into other countries.