China Boasts World's Largest Proximity Mobile Payments Market - eMarketer
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China Boasts World's Largest Proximity Mobile Payments Market

High growth continues after usage more than doubled last year

June 7, 2016 | Retail & Ecommerce

The number of people in China using their phones to pay for goods and services at the point of sale (POS) more than doubled last year, and by 2020 almost half of all smartphone users will be making proximity mobile payments, eMarketer projects. According to eMarketer’s first-ever estimates of mobile payment usage in China, there will be 195.3 million people using the technology in 2016—growth of 45.8% over last year.

Proximity Mobile Payment Users and Penetration in China, 2014-2020 (millions, % change and % of smartphone users)

Proximity mobile payments are payments made at the POS by tapping, swiping or checking in with a mobile phone. China is home to the largest and fastest-growing mobile payments market in the world. The US, eMarketer estimates, will be home to just 37.5 million proximity mobile payments users this year.

China’s rapid adoption of proximity payments is in part thanks to its late-mover advantage—unlike the US and other regions, China does not have a strong entrenched credit card culture. In effect, China has jumped directly from cash to mobile payments. In addition, urban areas in China have seen widespread adoption of Alipay and Tenpay.

“Despite a having a higher penetration rate than the US, China’s proximity mobile payments market still remains largely untapped, with usage mostly concentrated larger cities,” eMarketer forecasting analyst Shelleen Shum commented. “Like in the US, the challenge is to get retailers to upgrade their systems to accept mobile payment methods at the POS. The phenomenal opportunity for retailers is that smartphone users in China are more willing to store payment information in their phones and are more willing to experiment with other forms of noncash payments than users in most other countries.”

Smartphone Buyers and Penetration in China, 2014-2020

Also helping to drive the growth of proximity payments is the rising number of digital buyers in China making purchases on smartphones, suggesting a strong comfort level with new forms of ecommerce technology. eMarketer predict that smartphone buyers in China—people who make at least one purchase through a web browser or app during a calendar year—will account for more than 72% of smartphone users in 2016.

“This widespread adoption is fueled by growing smartphone adoption, a shift in behavior towards smartphone usage and the expansion of ecommerce to rural areas,” added Shum. “In addition, leading players including Alibaba and JD.com have been investing in apps and online mobile payment systems that better serve mobile buyers.”

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