Mobile Payments: A Way of Life in the Middle Kingdom

This entry was posted on Wednesday, July 18th, 2018.

While mobile payments are starting to catch on in the United States, mobile payments in China are so prevalent, they have begun to shape everyday life in the country. Chinese users are able to hop on the subway or bus, shop in a supermarket or convenience store, pay for needed supplies while on campus or settle a traffic fine via the mobile Quick Pass function. Mobile payments have become an inseparable part of daily life in China.

China Number One in Mobile Payments

A survey of 18,000 consumers across 23 countries and regions by Ipsos shows that 77% of all Chinese people use mobile payment services, putting China at the forefront of mobile payment adoption, ahead of India at 76%, the United States at 48% and Japan at 27%. Additionally, the survey goes onto report that 14% of Chinese consumers surveyed refuse to accept cash and 26% would accept cash only if the amount was less than 100 yuan (around $14.91 as of July 17th, 2018).

Mobile Renminbi

Non-bank payment organizations handled a total of 97 billion mobile payment transactions from 2013 to 2016, with a compound annual growth rate of over 195% according to the China Payment and Clearing Association.

The daily movement of China’s population is a good example of how mobile payments have shaped daily life in the country, with commuters and travelers using QR code scanning to board buses or subway trains. Using UnionPay mobile payments to settle all fees that occur while in transit is now the commonly accepted way to get from point A to point B in more than 400 counties and cities across China, with the highest percentages of the population already doing so located in Shanghai, Guangzhou, Tianjin, Hangzhou, Fuzhou, and Jinan.

In Hubei, car owners who have added their vehicle information to the UnionPay app and have it as their default payment option can drive through all toll gates along the highway without stopping in a similar manner to a driver in the San Francisco Bay Area with  .

Harmonious Society

The People’s Bank of China has launched a project with the goal to improve the quality of life through service enhancements that benefit every resident in China, dubbed the “Mobile Payment Convenience Demonstration Project.” The project is promoted by UnionPay and major banks in China. A press release from UnionPay has stated that the project “is not just a commercial enterprise, but a project for the convenience of the Chinese people, with the mission of benefiting the populace at large under the aegis of the China government and the support of the whole country.”

The Bottom Line

While the United States and other developed nations have an existing infrastructure of relying on payment cards, the lack thereof in China may have proven to be an advantage, as the Middle Kingdom is now the biggest country in terms of mobile payment adoption and penetration, to the point where a sizeable part of the country even refuses to accept cash. As things stands, China is currently paving the way for a cashless society.