Growing up in Germany, I`m accustomed to the fact that e-commerce is supported by the usage of credit cards for online payments. However, China is different! Here, mobile payments, - which hints to payment services performed from or through mobile devices -, serve as the primary source for consumers to pay for goods and services, both online and offline.

Leapfrogging: from cash to mobile wallet

That makes China one of the rare worldwide markets where mobile wallets oust, rather than supplement, many of the traditional financial services. Amplifying the significance of these trends is the velocity and willingness with which Chinese consumers are adopting new products, services, and retail experiences at rates, unseen in developed markets.

Today, the Chinese market is mainly influenced by over-the-top and e-commerce players, such as the well known Jack Ma`s Alibaba, which operates Alipay through its subsidiary Ant Financial Services and Tencents’ WeChat Pay and QQ Wallet.

The way the Chinese pay - a cashless society

Chinese consumers now have more payment choices for services and products than ever, while mobile payments will continue to growth within the Chinese consumer base, due to its convenient nature.

In the Chinese mega-cities, paying by paper money is all but dead. Armed with your smartphone, you can taking cabs, visiting markets, eating in a restaurant without any cash, as
from tiny street vendors to large chains, the majority of businesses accept your mobile wallet:

• 74% of the fast food chains, 66% oft the cafes and 64% of the restaurants accept mobile payment methods

• In retail, convenience stores are the highest-frequency sector for mobile payments with a 68% accepting mobile wallets, followed by supermarkets (63%), and malls (62%)
• For traveling, mobile payments have become routine paying method for taxis (62%), hotels (57%), and tourist attractions (56%)

          (Source: Technode 2017)

The next step for the big players in this service-industry is the expansion beyond the major cities, as much of rural China still relies on cash. But it won’t stop there!

China with the world's biggest source of outbound tourists, made WeChat Pay and Alipay forming partnerships with overseas companies to allow Chinese travellers using their home-based mobile wallets connected to their bank accounts. Foreign companies in this sector should be on the watch: China's travellers not only bringing their „huge“ mobile wallets, they're also bringing the competition to this service industry on a global scale.

BTW: Mobile payment and data protection? Not really a hot topic in China. For now, it seems that users have chosen convenience over privacy.

Dirk Müller