The Chinese payment apps have successfully created dominance over all the payment methods currently being used by the consumers for their online as well as offline shopping. During the Covid-19 pandemic time, when most of the countries were busy putting a hell lot of effort to promote mobile payments among their citizens, China was simply leading the race as it had already built up a digital-based cashless payment marketplace and was utilizing it extensively.
Today, China is the world leader when it comes to the number of users and penetration rates in its population for mobile payment apps as more than half of the Chinese population is actively using these Chinese payment apps for payments.
And the good part here is that according to a survey in the year 2020, there is a significant percentage of digital payments by users belonging to the areas like counties, towns, and villages apart from the urban ones showing how deeply these mobile payment platforms are penetrating the people from all types of demography.
Chinese Payment App Landscape – Recent Trends & Statistics
You would agree that for any tourist, one of the biggest hassles is to carry cash or a card with them for their shopping and other expenses. Do you know Chinese tourists spend a hefty amount of money on traveling? In the year 2019, the expenditure by Chinese tourists on foreign travel was a whopping 254.6 billion US dollars, making them rank first in the world in terms of contribution to global tourism.
Now, going with the huge demand of Chinese tourists, Chinese payment apps expanded their horizons to markets all over the world to enable the Chinese tourists to pay using their mobile apps in foreign countries. As per a survey in August 2019, nearly 60 percent of Chinese tourists mentioned that they prefer Alipay, and 35.2 percent of tourists expressed WeChat Pay as their choice for their payments while traveling in foreign countries.
Also, Chinese mobile payment apps have started providing their services to overseas users who are traveling to China. They can easily use these Chinese payment apps using the credit cards issued in their countries. Not only this, but these Chinese digital payment service providers are also actively putting efforts to attract overseas merchants to collaborate for their services.
Chinese payment apps are providing tremendous opportunities to Chinese customers to get rid of cash and cards. They can simply go shopping or order online using their mobile phones payment apps without fearing losing their money, not having sufficient change while paying, carrying the cash or cards in their wallet, standing in long queues waiting for the physical money transactions, or fear of card not being read by the POS machine, etc.
Because of all these factors, Chinese payment apps have got huge popularity and it is continuously booming. As of December 2020, there were around 852.5 million unique mobile payment users in China. And the year 2020 saw a huge number of mobile payment transactions in China go to around 123.22 billion.
Talking about the volume, about 205 trillion yuan was transferred via Chinese mobile payment apps in the year 2019 and it is expected to reach 292 trillion yuan by the end of the year 2022.
Looking at all these facts and figures, it is quite obvious to understand that the future of financial transactions in China is going to be completely mobile payment apps based. Huge opportunities are lying in such an omnipresent digital fintech environment for starting and growing businesses for companies that are looking toward the huge Chinese market. The only important consideration here is to choose the right digital payment app platform according to your requirement. We will explain in detail all the existing Chinese payment apps in the coming sections.
What Are China’s Main Payment Systems?
Just two decades back, China was purely a cash economy. Then, the radical change in technological advancement along with a need for upgrading the transaction system from cash to card and card to digital led to the revolution in the Chinese payment system. The exponential growth of Chinese smartphone users created an opportunity for developing this alternative payment system.
Today, the Chinese payment system is successfully built on digital wallets and QR codes. And the credit for this success can be undoubtedly given to the two Chinese tech giants viz. AliPay and WeChat Pay, who created this alternative payment ecosystem.
Even though the number of different Chinese payment apps is countless, these two apps have completely transformed China’s payment system and are currently the largest payment system in China with over 90 percent of people in China’s largest cities using these apps as their primary payment method.
Alipay: Alipay is the top Chinese third-party mobile and online payment platform in terms of both the number of users and total transaction volume. Started by Alibaba group, Alipay was introduced as the first online digital payment solution in China in the year 2004. Alipay launched its mobile e-wallet service in the year 2008 and then there was tremendous growth in its userbase.
Today, it has become the biggest player in China’s mobile payment service with more than 700 million unique users and more than 1.3 billion annual active users as of June 2020. Over a year, it processed $17 trillion worth of transactions in mainland China with 80 million merchants using Alipay for business.
Alipay provides secure, easy, and quick online payments for consumers and businesses with escrow-type service. To set up Alipay, foreign companies need to pay an upfront fee of USD 1000 and the transaction fees vary from 2.5% to 3%. For companies registered in China, there is no upfront cost for payment but they still pay 0.7 to 1.2% transaction fees.
Do you know that at present, Alipay has successfully partnered with almost all the leading banks in China along with Visa and other financial institutions because of its highly advanced e-commerce payment technology and sophisticated risk management system!
At present, Alipay provides a plethora of utility services to its customers that includes QR code payments, credit card bill payments, bank account management, mobile phone recharge, bus, and train ticket purchase, food order, renting a vehicle, insurance payment, digital identification document storage, water, and electricity bill payment, traffic fine payment, property fee, cable tv fee, credit card repayment service, taxi fare payment, etc.
Looking at such versatile services along with security and ease of payments, Alipay truly deserves to be a torch bearer among all the Chinese payment apps.
WeChat Pay: WeChat is China’s one of the topmost smartphone-based social media super-apps being used for gaming, shopping, and digital payments. It integrated its online payment brand Tenpay with it and created WeChat Pay in the year 2013 to enable easy and transparent money transfer through its messaging platform. Since then, with the backing of WeChat’s super strong monthly active userbase of 1.27 billion in the last quarter of 2021, WeChat Pay became the most frequently used mobile payment app by users with a proportion of 92.7 percent in the year 2020.
As per the latest report, in January 2022, it has over 10 million merchants, and 23 thousand monthly service providers, and has tied up with more than 1800 banks and payment institutions.
Because of the immense popularity of WeChat in China, its payment app WeChat Pay reaps its benefit with more than 20 million users using it for digital transactions every day and 200,000 people signing up for the services every day. WeChat Pay provides payment services to the users of the WeChat app through numerous functionalities. In the year 2021, it had 900 million active users.
On WeChat and AliPay, person-to-person payments and merchant payments are free of charge for end customers. However, customers must pay a 0.1 percent fee when they withdraw amounts above a threshold ($153 for WeChat and $2,897 for AliPay) from their e-wallets.
Other Chinese Payment Systems
Apart from these two giant players, many other Chinese payment systems constitute less than 10 percent of the market share. Some of them are mentioned below.
1. UnionPay App
The UnionPay mobile app is the unified mobile payment portal for the Chinese banking industry. It was developed and launched by UnionPay and commercial banks together in association with the payment institutions in China in the year 2017. It provides one-stop mobile payment services to its customers. It is being used in more than 94 countries for QR code-based payments. Do you know that more than 30 million merchants in mainland China accept UnionPay QR code payments! UnionPay QR code payment currently has provisions for P2P, P2B, and B2B payments as well as value-added services via QR code.
Tenpay was developed by Tencent company – the Chinese social media and messaging tech giant in the year 2005. Tenpay users can make payments and send/receive money through a Tenpay wallet that is compatible with the net banking services of major banks in China. Currently, more than 200,000 shopping websites provide facilities to use Tenpay. Tenpay integrated with WeChat Pay in 2013 to enable money transfer through messaging app. In the year 2021, Tencent integrated its WeChat Pay service with UnionPay Mobile QuickPass enabling its users to scan QuickPass QR codes and make payments.
BestPay is one of the widely used online payment apps in China that was established in the year 2011 by Orange Finance, a wholly owned subsidiary of China Telecom. It has got more than 200 million users as of January 2016. It provides real-time payment solutions. It received payment permission including internet services, mobile and fixed telephones payment, bank card acquiring, prepaid card issuing, and processing.
4. JD Wallet
5. Baidu Wallet
Baidu Wallet is an e-wallet service owned and operated by Chinese search giant Baidu for interbank transfers, payments for online purchases, utility bills, etc. It is linked to various other services such as Bai Fa, the wealth management products. It has more than 100 million mobile wallet users and has tied up with PayPal, making it a strong competitor for other Chinese payment apps.
It is known as the One Wallet app, and it is quite a smart and versatile mobile wallet app. It helps its users in wealth management, shopping, travel, etc. It enables its user safe, efficient, and convenient financial management and payment services
7. Huawei Pay
Huawei Pay was launched by Huawei, a leading global information and communication technology provider, as a secure and convenient mobile payment service for Huawei/Honor device users. It is based on NFC (Near Field Communication). To make a payment, you simply have to tap your NFC-capable phone against a card reader or contactless payment device. In some countries, it provides the facility of QR code scanning. It is basically used for in-store payments by tapping, payments by scanning QR codes, taking public transport, in-app purchases, etc. Huawei Pay is currently available in 25 countries and regions.
PayPal is an American multinational financial technology company that entered China in 2005 with various payment services designed for the Chinese population. It got into an agreement with Baidu Wallet in 2017 and then later with China UnionPay. As of the year 2022, PayPal has 426 million active registered account holders and is available in more than 202 markets around the world, and enables its users to hold funds in more than 25 currencies worldwide. In 2019, it acquired a Chinese licensed payment company named GoPay. In January 2021, it became the first foreign payment company that has a Chinese license and 100 percent ownership of China’s payment platform, gaining a very strong position in the Chinese local online payment market.
9. Apple Pay
Apple Pay is a digital wallet and mobile payment service provided by US tech giant Apple Inc. It enables its customers to make payments in person, in iOS apps, and on the Safari web browser using iPhone, Apple Watch, iPad, and Mac. Apple Pay service was launched in China in 2016 in collaboration with UnionPay and fifteen major banks. Apple Pay uses security technology like the EMV Payment Tokenization Specification.
10. Meituan Pay
Meituan Pay is a payment platform by Meituan, popular Chinese food delivery and local service giant with lots of online and offline services. It is faster than any other payment platform available on Meituan. China’s digital yuan can also be used on Meituan Pay to make purchases. Users can link the digital yuan app to the Meituan app and then use it for all the payments.
How Chinese Payment Systems Work?
Mobile payments in China are nothing less than a grand success story as China emerged as the global leader in the digital payment system. Chinese payment systems work through QR codes technology. In a QR code system, a customer can make the transaction using a mobile phone simply by scanning the QR code. They are extremely fast and highly secure.
Using QR codes for making online transactions is very simple and works in two different ways:
- In the first method, the customer uses his mobile phone’s payment app to scan the seller’s QR code that is generally printed at the checkout counter, or products, or restaurant tables. Then he enters the amount he wants to pay and then after confirming, the money gets transferred to the seller’s account. This method is generally popular with small businesses.
- In the second method, the customer displays the unique QR code generated on his mobile phone’s payment app to the seller, and the seller then scans it with a QR code scanner/reader device. Once the buyer is recognized by the scanner, the seller then enters the amount in his system, and it gets deducted from the customer’s account. This method is simpler and faster for the customer as he has nothing to do except show the QR code to the seller. This method is generally popular with the larger business that can afford to invest in QR code scanners.
The biggest advantage of QR code-enabled payments is that they are compatible with any smartphone with an internet connection.
Benefits of Chinese Payment Systems
Chinese payment systems bring a lot of benefits compared to the old conventional methods like cash and cards. Let’s explore a few of them.
Convenience for the customers: The extent to which mobile payment systems have brought convenience to the customer is beyond imagination. Be it dining in a restaurant, ordering food online, shopping from a mall or a street vendor, booking taxi/bus/train tickets, paying mobile bills or credit card bills, everywhere you can transact via mobile payment apps.
Tax Refunds: The two major Chinese payment apps viz. AliPay and WeChat Pay, have come into a partnership with tax refund institutions enabling customers to easily secure rebates on their purchases. Do you know that AliPay can be used for tax refunds in more than 80 airports globally!
Higher Security: Mobile payment apps are more secure than ever before because of the highest level of technical security measures like encryption and tokenization. Also, the app developers provide regular security updates to these apps keeping them safe and secure from new cyber threats. Security features like Two-Factor Authentication (PIN, fingerprint, face scan, or iris scan), complex transaction passwords, the upper limit for each transaction provide an additional security layer to these apps.
Faster Payments: This is one of the most important advantages of doing transactions through mobile payment apps. Gone are those days of counting cash or waiting for the card payment to finish. Now mobile payments are done in the blink of your eye. Such fast payments provide an excellent user experience and help businesses to expedite their payments.
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