Instead of travelling with large amounts of cash, most Chinese people choose mobile payment methods, such as WeChat and Alipay as their primary payment methods. According to the database shared by Merchant Machine, China has become the most developed country for mobile payments.
According to the China mobile payment industry analysis report, Industry supply and demand status and development planning trends (2019), released by China’s BaoGao website, Alipay and WeChat have accounted for 92% of China’s mobile market share, resulting in a duopoly market. At the end of 2017, UnionPay launched a mobile payment app called Quick Pass with a QR code payment method enabled. Given the strong position that UnionPay has in China, as well its extensive service network and huge customer base, UnionPay is the business that can challenge the duopoly mobile payment market. Below we look at the current development of the Chinese mobile payment market.
The user scale of mobile payment is still expanding in China
From the perspective of city size, the user penetration rates of first tier, second tier and third tier cities are 90.45%, 93.5% and 92.4% respectively. The data shows that there is no significant gap in user penetration between different sizes of cities in China, which indicates that mobile payment is filling the gap between different regions. The data of Alipay’s national report also shows that 11 provinces with 90% payment market share occupied by Alipay are all located in the middle and western regions of China. This further proves that mobile payment can efficiently reduce regional differences.
2019 Penetration Rate of Mobile Payments in China
Source: Ministry of Industry and Information Technology
The popularity of third-party payment on online shopping
The process of the rapid growth of the third-party payment market is also a process of developing user payment habits. According to the survey, the proportion of third-party payment in people’s daily expenses has reached 48%, which is 3% higher than 2017, while card payment (including online and offline) and cash payment are slightly lower. The increase in the proportion of third-party payment was mainly driven by mobile payment, which increased from 32% in 2017 to 35% in 2019. Mobile payment has gradually become the most common payment method for Chinese people.
2019 China’s payment market share
Source: Ministry of Industry and Information Technology
The Asia-Pacific area shows a relatively higher penetration rate than other geographical areas. Specifically, China has the highest penetration rate of mobile payment usage at 47%. Following China, Japan presents a 20% penetration rate, ranking fourth globally. The third country in Asia is Singapore (17%). This remarkable penetration rate of mobile payment use in the Asia-Pacific could be attributed to the increasing tourism consumption of Chinese people.
Comparably, Norway ranks second in the world (42%), followed by the UK (24%). Surprisingly, the mobile payment usage rate only reaches 17% of the population in the United States, which ranks in seventh place.
2017 Number of Users of Selected Global Mobile Payment Platforms (Million)
The U.K. attracts Chinese tourists because of its vibrant and creative culture, luxurious shopping experience and excellent academic offering. The number of Chinese tourists visiting the UK has doubled over the past decade. Between January and September 2017, the number of Chinese tourists increased by 30% compared to the same period in 2016, contributing to a 48% growth in total consumption. According to the statistics of VisitBritain, China was the 22nd largest inbound source market for the UK in 2017, and the 10th for spending.
Against this background, Chinese mobile payments have accelerated significantly, entering overseas markets as well. The business scope of Alipay and WeChat Pay has been extended to Heathrow Airport’s Duty-Free Shops, Camden Market, Harrods, etc., which indicates that the overseas expansion of business, as well as the overseas acceptance of Chinese mobile payments, has gradually increased. WeChat Pay focuses on Chinese tourists visiting the UK, and has therefore covered a wealth of payment scenes, such as shopping, retailing, hotels and restaurants.
The British government also values the huge potential of the Chinese market. During the visit of Prime Minister Theresa May to China, the British Tourist Authority launched a new marketing programme called “GREAT Britain” to encourage more Chinese people to visit the UK. The Authority expects the annual spending by Chinese consumers in the UK to double by 2020, reaching 1 billion pounds. With the boom in mobile payments, we believe that Alipay and WeChat Pay will gradually occupy a larger share of the payment market in the UK.
