Market Trends of China Payments Industry
This section covers the major market trends shaping the China Payments Market according to our research experts:
Mobile Payments to Drive the Payments Market
- China's booming mobile payment is significantly dominated by big players such as Alipay and WeChat Pay, adopted widely by shopkeepers, restaurants, and various E-commerce platforms. Mobile payment solutions are further expected to gain traction in a country with high internet and smartphone penetration rates over the forecast period.
- Mobile health (mHealth) deployments have grown tremendously in recent years. Incorporating mobile payment services into healthcare offerings can play an important role in developing more sustainable business models for mHealth providers, increasing revenues through new value chain participants, and lowering costs associated with cash management, fraud, and the settlement of remote payments for diagnostics and other services.
- The key enabling factor in China that made it ripe for digital payments and the retail revolution is the high bank account ownership level, which served as a foundation for funding mobile wallets. Major regional players, such as Alipay and WeChat Pay, could ride on existing financial infrastructure through bank accounts, bank cards, and clearing and settlement systems.
- The major companies have also created easy onboarding for customers and merchants to drive uptake. Customers self-enroll through the app, and sellers can start accepting mobile payments by sharing their unique QR codes even before registering as merchants.
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Rising Adoption of E-commerce Supported by M-commerce in China
- Mobile commerce is very popular in China, and this method of shopping dominates E-commerce in the country. Almost three out of every four of China's e-commerce transactions are carried out on smartphones. Major players are providing an advanced, market-leading mobile online shopping experience supported by innovative payment options to meet the demands and capture the attention of China's highly sophisticated mobile shoppers.
- As a result of new technology, customer demand, fintech disruption, and governmental actions, the switch from cash to digital payments has been gaining speed for years. This shift accelerated during the pandemic and the rise of e-commerce as more customers made purchases online. New categories of payment service providers have emerged due to the digital environment, and they have started to pose a threat to banks as the main supplier of digital payments and related services.
- Hong Kong is starting to use the BUY now, pay later (BNPL) payment mechanism, which is quickly becoming common in Asia's e-commerce market. For instance, in November last year, Ant Group expanded its product offerings in Asia, including a BNPL service in Hong Kong and small business loans in Singapore. Ant Bank PayLateris being rolled out on AlipayHK by the Chinese Ant Bank (Hong Kong) and AlipayHKsubsidiaries. Users would be able to pay in installments while shopping on AlipayHK'snetwork of merchants as well as on the e-commerce portal Taobao.
- Furthermore, online shopping penetration increased in the region, supported by mobile commerce and innovative digital payment solutions offered by various market players. For instance, CNNIC reported that the online shopping penetration was 73.6% in 2018, which grew to 80% last year.
- Moreover, digital Payment solutions such as Alipay and WeChat Pay are rapidly growing as payment solutions for E-commerce platforms. While Alipay benefits as a primary payment tool on all the e-commerce platforms owned by the Alibaba group, WeChat Pay, which Tencent offers, leverages its massive social media user base of 1.2 billion people to push online payments. As Chinese customers continue to embrace e-commerce, these payment solutions are further expected to gain momentum.
- Furthermore, there's been a surge of interest in BNPL services in China over the last decade. A few factors driving BNPL are unprecedentedly low interest rates, the rise of online payment through Alipay and WeChat Pay, and highly well-funded fintech start-ups eager to acquire new customers. Various E-commerce platforms in the region provide BNPL services to their customers.
