Chinese mobile payments services market is projected to grow 21.8% from 2017 to hit $96.73 trillion (£75.96 trillion) in 2023, driven partly by increasing demand for e-commerce.
China’s mobile payments market projected to grow 21.8% to $96.73 trillion
China has a growing middle class with an appetite of all forms of modern technology and gadgets. As a result, Chinese mobile payments are expected to witness three-fold growth. The number of active mobile payment users is expected to double by 2023.
Chinese consumers do not have the history of credit card use as in the US or UK. Furthermore, the wide adoption of e-commerce has facilitated the rapid expansion of mobile payments in China.
A few companies are leading the market. Alibaba through its dominance of e-commerce. Tencent through its mobile social media and messaging platform. WeChat and QQ connect mass market audiences.
The companies also lead the Chinese mobile payments market with their respective eWallet products AliPay and WeChat Pay. Together with a growing middle class in China has accelerated the growth of mobile payments in the country.
Growth opportunities
The Frost & Sullivan report highlights a number of growth opportunities including:
- Senior citizens in China make up 10.8% of the population or 150 million people. The report says this is a huge potential market for mobile payments in China.
- Despite the growth of mobile payments across the country, there are still underserved pockets such as the rural region population
Cross border payments
China has also seen an increase in cross-border payment transactions. This is primarily due to growth in sectors such as e-commerce, travel and overseas education. Cross-border transactions amounted to $6.66 trillion in 2016. E-commerce plays an important role in these transactions. The future growth of e-commerce will be a key contributor to mobile payments in China.
Frost & Sullivan reported that nearly 65% of Chinese tourists have used mobile payments abroad, approximately six times higher than the average non-Chinese traveller.
“In China, e-commerce 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 for mobile payments services in China is expected to grow at a rate of 21.8% from 2017 to 2023. This represents a three-fold rise from $29.93 trillion to $96.73 trillion. The total number of active mobile payment customers is expected to reach 956 million by 2023 from 562 million in 2017. Frost and Sullivan believe this will attract additional investments from mobile payments market participants.
Mobile payment popularity in China
A recently published report by Tencent highlighted that in 2017, 40% of Chinese users carried less than RMB¥100 (US$15) in cash. This underlines mobile payment‘s popularity among Chinese citizens.
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.
Frost & Sullivan predicts that China will continue to be a major player in the global mobile payment services market. Furthermore, service providers in the country will continue to focus on improving and enhancing security on mobile payment platforms. It will be interesting whether any new features and functionalities will become available to western consumers.
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