China leads world in mobile payment services growth
Mainland China has become the world’s largest and fastest-growing market for proximity mobile payments, with more than a third of the nation’s smartphone subscribers predicted to be using the technology this year, analysts said.
That upbeat forecast by research company eMarketer followed recent initiatives by China UnionPay, the country’s sole domestic bank card organisation, to introduce branded mobile payment services from smartphone suppliers Apple, Samsung Electronics and Xiaomi in the domestic market.
“The phenomenal opportunity for retailers is that smartphone users in China are more willing to store payment information in their phones and experiment with other forms of non-cash payments than users in most developed countries,” eMarketer forecasting analyst Shelleen Shum said on Tuesday.
Proximity mobile payments are purchases made at the point of sale by tapping, swiping or checking in with a smartphone, using so-called near-field communications (NFC) built in the handset or other technologies like the machine-readable optical label known as QR code.
According to eMarketer, the number of people in China using their mobile phones to pay for goods and services will reach 332.3 million, or 49 per cent of the nation’s smartphone users, by 2020.
That would be up from an estimated 195.3 million people, or 38 per cent of mainland smartphone users, this year. There were 134 million people using proximity mobile payments last year, which made up 28 per cent of smartphone users in the country.
Those estimates by eMarketer included users aged from 14 years old who have made at least one proximity mobile payment transaction on their smartphone in the past six months.
“China’s proximity mobile payments market still remains largely untapped, with usage mostly concentrated in larger cities,” Shum said. “Like in the US, the challenge is to get retailers to upgrade their systems to accept mobile payment methods at the point of sale.”
It is an opportunity that China UnionPay, operator of more than five million contactless payment terminals that support NFC-enabled smartphones, has tapped into by backing the roll-out of Apple Pay and Samsung Pay services on the mainland early this year.
China UnionPay, which supports mobile payments for hundreds of millions of mainland cardholders, also teamed up with Xiaomi in April to co-develop a new mobile payment service.
A Jefferies research note has described those initiatives as showing China UnionPay’s determination “to win back lost ground” from larger domestic payment rivals Alipay, the payments business of Alibaba Group affiliate Ant Financial Services, and Tencent Holdings’ Tenpay.
According to eMarketer, urban areas in China have jumped directly from cash to proximity mobile payments on the back of strong e-commerce growth. Both Alipay and Tenpay support mobile payments via QR code.
Alibaba is the owner of the South China Morning Post.