A Country Pays Paperless — The Popularity of Mobile Payment in China

One day, you walk alongside the street. You smell something nice and you look around. It is a street food car there and you get a hanger due to the beautiful smell. You order your food and then take out your wallet. However, the vendor shows you a QR code and says that you could pay for the food by scanning it. This scenario might be not common in the United States but you can see it anywhere if you travel to China. Cash has become rarer and rarer in China.

The QR codes of street vendors in China — Source: Google Image

According to the data from Statista, about 897 million Internet users in China are getting connected through their smartphones up to March 2020 and 90% of them are using Mobile Payment every day. Chinese people now use E-payment to pay street foods, grocery store orders, convenience store purchases, restaurant bills, hospital bills, gasoline bills, and anything you might imagine. Moreover, you could even give your money to beggars by E-payment. Not joking, it could happen in China today.

I have had some discussions with my American friends about Mobile Payment. As they could not understand why Chinese people love Mobile Payment so much, I realized that I did not seriously think about this question as well. Maybe, we could consider these factors.

Late Development of Internet

As far as I am concerned, the development of the Internet in China has skipped many stages. Unlike in the US, the Internet has been developed very late in China. Therefore, most Chinese started to get connected to the Internet in the first decade of the 21st century, which is also the early developing stage of Mobile Network (Techsling, October 2015). This means that most Chinese are more familiar with a mobile device than PC, especially gen X of China. For example, my parents know nothing about computers but they are smartphone experts. This makes Chinese people are more likely to accept Mobile Payment which is an important reason why Mobile Payment could grow up.

Number of internet users in China from December 2008 to March 2020(in millions) — Source: Statista

Internet Using Habit

As I mentioned, the Internet has been developed very lately in China so Chinese people did not experience the popularity of email. As a result, Chinese people today use cellphone numbers to sign up for different mobile applications instead of using email addresses. This fact increases the stickiness of users to smartphones because phone numbers can only work on smartphones. It has provided another important opportunity for Mobile Payment to grow.

Influence of Internet Companies

There are two most powerful Internet companies in China which are Tencent and Alibaba, and they are dominating the Mobile Payment market with their applications. Tencent is the developer of WeChat which is the most popular social media platform and messaging app in China. No kidding, WeChat is almost installed in every personal smartphone (Iqbal, July 2020). After WeChat has launched its payment function in 2013, users naturally started to use this function to send money to friends and make payment. On the other hand, Alibaba has developed its AliPay in 2004 as the official payment channel for its online shopping site — Taobao.com which is the largest e-commerce site in China. With the rapid development of Taobao.com, AliPay has also become the other giant of Mobile Payment. These two companies acquired most Internet users in China so it provides a huge customer base for Mobile Payment.

Other Reasons

The Mobile Payment market in China is based on the invention of the QR code, which makes the payment process to become extremely convenient. By scanning other’s QR code and input amount, you can send money easily even with people you meet for the first time. The wonderful user experience boosts its popularity.

The policy environment and cultural environment also help Mobile Payment to grow. China does not have consumption taxes and a tipping culture in China which means you do not need to do complicated math problems each time when eating out or buy from small stores. You only need to input numbers we see on the bill and then you are clear. This provides the possibility of the wild spreading of Mobile Payment.

Chinese people hold a different opinion of the credit card with Americans. Due to the influence of traditional culture, people are more willing to consume within their affordability and only a few can accept credit cards. Therefore, there is less competition for Mobile Payment.

Then, what is the influence? The popularity of Mobile Payment has changed the lifestyle of Chinese people to some degree. Cash is used less frequently and people usually only need to bring their smartphones when going out. I used to hear my friend complained that one piece of cash has lied in his wallet for more than 6 months but he had no chance to spend it.

For e-Commerce, the development of Mobile Payment has greatly boosted the growth of e-Commerce in China. Alibaba’s 11.11 day has become a big day for all e-Commerce companies and sellers in China and it generated over $38 billion within only Nov 11, 2019 (Kharpal, Nov 2019). Without Mobile Payment, it cannot happen.

Mobile Payment has made great influences on the society of China. Whether it is good or not? Hard to say. At least it shows more positive influences than negative now.



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Zifan Chen

New York University, SPS, Integrated Marketing, Graduate Student