China expects mobile payments to grow three-fold
PEOPLE can do without their wallets in China because a majority of the businesses, whether inside malls or on the streets, accept mobile payments.
The country is ahead of both India and Singapore in terms of mobile payments, and according to a recent study by Visa, even the country’s aging population is keen on using the technology.
According to eMarketer’s figures, 45.2 percent of the population was expected to use mobile payments last year, a total of 525.1 million users. This year, mobile payment adoption is expected to grow 13.2 percent year on year and reach a total of 577.4 million users.
According to Frost & Sullivan, low credit card usage and the increasing popularity of e-commerce, coupled with a growing middle class have accelerated the growth of mobile payments in the country.
In fact, Chinese residents not only use mobile payments while at home but also when traveling overseas. It is estimated that 65 percent of Chinese tourists used mobile payments abroad, approximately six times higher than the average non-Chinese traveler.
However, analysts and payments companies believe that seniors, who are a large part of the country’s population, represent, will be a great opportunity in the coming months. Further, rural China too will be a big market for payments companies.
Forecasts issued by Frost & Sullivan suggested that the market of mobile payments services in China will grow at a compound annual growth rate (CAGR) of 21.8 percent from 2017 to 2023, growing three-fold from US$29.93 trillion to US$96.73 trillion.
The total number of active mobile payment customers is also expected to reach 956 million by 2023 from 562 million in 2017 which will attract additional investments from mobile payments market participants.
Frost & Sullivan’s forecasts are in line with its peers. Think tanks such as McKinsey and Bain & Co too see potential and growth in China’s mobile payments industry.
What’s interesting in China is that mobile payments haven’t grown independently. It’s the growth of an ecosystem built by a mobile payments facilitator that has actually fuelled the growth.
Take WeChat and Alipay for example. Both mobile payments platforms have gained popularity among users given the additional features they offer either by themselves or via sister apps.
Although China is already leading the world when it comes to mobile payments, companies that make significant strides towards bringing the rural and the aging populations into the fold will win big.