Mobile payments: China’s cashless revolution
In an earlier report
, we highlighted the case study of a Channelnewsasia reporter who experimented living a day in China without cash. The conclusion of that report is that it is indeed very possible to live in China without any physical cash if you have WeChat Pay or Alipay installed on your smart phone. However, while the facilities are there in place to enable a ‘cashless’ lifestyle, just how prevalent are mobile payments in China?
In Q1 2017, Chinese consumers spent 18.8 trillion RMB (S$3.84 trillion) via mobile payments last year. This is nearly 50 times greater
than the amount spent by consumers in the United States. Even after taking into account the difference in their relative populations, it is clear that the per capita spending of Chinese consumers on apps such as WeChat Pay and Alipay far outstrip those of their American counterparts.
There are many reasons for this. Firstly, young people are more used to a cashless lifestyle. The average amount of cash carried daily by the post-90s generation is just 172RMB (S$35) as compared to 328RMB (S$67) for the post-80s generation and 479RMB (S$97) for the post-70s generation. Taken as a whole, 40% of Chinese people leave their houses with less than 100RMB (S$20) in their pockets. When asked if they would feel concerned if there would be a situation requiring cash, 84% of respondents replied that they are confident that they can use mobile payments such as WeChat Pay.
Secondly, and importantly, mobile payments such as WeChat Pay and Alipay have permeated every industry in China. However, industry watchers have noted that the penetration of mobile payments varies across different sectors. In the dining industry, 74% of fast-food chains and 64% of restaurants accept mobile payments while only 40% of food stands do so. As for retail, 68% of convenience stores and 63% of medium to large supermarkets accept mobile payments. As it stands, the entertainment industry appears to have the lead in mobile payments penetration with 77% of movie theatres allowing for payments through apps like WeChat Pay. A reason for this is the ease with which users can pay through WeChat Pay via third-party apps like Meituan
In the future, mobile payments are expected to narrow the gap between urban and rural consumers in China because mobile payments lower financial costs. The slower adoption rate in the senior demographics is also deeply rooted in perceptions towards technology and spending habits. This is expected to change with both government and enterprises such as WeChat working together to make China’s cashless society truly universal.
*Statistics used in this article has been taken from a recent publication by WeChat. View more here
About FOMO Pay Pte. Ltd
FOMO Pay is the first authorized WeChat Pay & Baidu Wallet partner in Southeast Asia, and was selected as one of the TOP 100 Asian Companies by E27, TOP 100 Startups by Red Herring Asia, and Top 8 by DBS’ FinTech Accelerator Program. FOMO Pay provides a one-stop solution for local merchants by facilitating payment collection from the China market, including Chinese tourists. This comprises of online/offline Chinese payment modes, such as WeChat Pay, Alipay and Union Pay. FOMO Pay’s business solution serves clients from a wide range of industries, including the telecom, publishing, tourism and hospitality, F&B, education and retail industries.