China cashing out as mobile payments soar
Popularity of system has analysts forecasting country could be first to stop using cash
Yang Qianqian holds out her smartphone to scan a bar code on the mobile of a vendor selling fresh fruit and vegetables at a bustling outdoor market in Beijing.
The dance student is part of an explosion in the use of mobile payment platforms in China as consumers increasingly take out phones instead of cash to pay for everything from a coffee to a language class or a gas bill.
“Even though I have cash on me it’s not convenient to get it when I am carrying a lot of bags,” said Yang, 25, clutching plastic bags filled with pears, potatoes and watermelon.
China was the first country in the world to use paper money but centuries later the soaring popularity of mobile payment has some analysts forecasting it could be the first to stop.
The gross merchandise value of third party mobile payment rose more than 200 per cent to 38 trillion yuan (about $5.6 trillion) in 2016 from a year earlier, according to China-based iResearch.
The growth of the cash-free system has been supported by China’s rapidly expanding ecommerce market as Chinese shoppers increasingly shun bricks and mortar stores.
“I think it’s really very possible that China becomes the first or one of the first cashless societies in the next decade,” said Ben Cavender, a director at China Market Research Group.
Cavender estimates China’s mobile payment market is already 40-50 times larger than the United States.
Alipay, started by e-commerce giant Alibaba and now owned by its affiliate Ant Financial, and WeChat Pay, which is built into Tencent’s popular messaging service, have hundreds of millions of users between them and are China’s dominant payment platforms.
In Beijing it is hard to find a product or a service that cannot be purchased with a mobile.
At the fresh produce market, stallholders display bar codes on tables laden with fruit and vegetables for customers like Yang to scan — though many shoppers appeared more comfortable with cash.
Cash still king
Mobile accounted for eight per cent of the total value of retail payments in 2015 and is expected to reach 12 per cent in 2020, according to a report published in April by UNbacked Better Than Cash Alliance.
But cash is still king in China — although less so than it used to be.
The Better Than Cash Alliance expects cash’s percentage of the value of retail payments to fall to 30 per cent by 2020. It stood at 61 per cent in 2010.
A key attraction of mobile payment is convenience.
People can carry little or no cash and avoid the problem of their debit or credit card being rejected due to the limited number of point-of-sale terminals in stores.