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Third-Party Providers Drive Mobile Payments in China

Value of mobile payment transactions in China neared $200 billion last year

April 4, 2014 | Retail & Ecommerce

China’s mobile payments market is poised to explode, but the combination of technology and provider that will succeed at drawing wide acceptance among merchants and consumers remains to be seen, according to a new eMarketer report, “China Mobile Payments: Dueling Technologies, Gigantic Opportunities.”

Companies outside of the traditional financial services sector—in particular, ecommerce giants Alibaba and Tencent—are driving much of the activity and innovation around mobile payments in China.

iResearch Consulting Group reported that third-party mobile payment services in China achieved a total transaction volume of RMB1.22 trillion ($197.09 billion) in 2013, a 707.0% year-over-year increase. This figure excludes payments processed by conventional banks and China UnionPay, the country’s bank card association, and does not distinguish between whether those mobile payments came at point of sale, or via online money transfers, credit card payments or mobile shopping. It also includes peer-to-peer money transfers.

Mobile Payment* Transactions in China, 2010-2017 (trillions of Chinese yuan renminbi and % change)

This data illustrates the massive growth of third-party mobile payments and their providers, which have swarmed to occupy a space that banks and telecoms in China have neither the consumer-facing experience nor the seemingly expertise to address properly. Much of this growth is dependent on the ease with which companies like Alibaba’s Alipay, Tencent’s Tenpay and UnionPay’s Lakala facilitate a variety of payment options via smartphones, as well as consumers’ increasing willingness to shop online via mobile devices.

iResearch also found payments made via text message accounted for just 6.1% of mobile payment transactions in 2013, down from 92.5% in 2010.

iiMedia Research estimated a far different level of SMS payment activity, putting it above 60%. The discrepancy most likely reflects the fact that the iResearch data is focused on third-party payments, whereas the iiMedia data covers all mobile payments, and users are more likely to send SMS payments via their existing payment mechanisms with banks and telecoms.

Notably, payments made via the mobile web—typically completed via apps or other services—accounted for 93.1% of the transactions, while proximity technologies’ share of China’s mobile payments market dipped to 0.8%, down from 2.6% in 2012. Again, proximity payments’ shrinking share should be seen in context of a boom in mobile web shopping, including purchases made through mobile apps.

Mobile Payment* Transaction Share in China, by Type, 2010-2017 (% of total)

According to iResearch, QR codes and sound-based check-ins are expected to drive growth in the proximity payments segment in 2014. Even so, the consultancy forecast only incremental progress for proximity technologies as a share of total mobile payment transactions through 2017.

The full report, “China Mobile Payments: Dueling Technologies, Gigantic Opportunities,” also answers these key questions:

  • What are the key platforms driving mobile payments in China?
  • Who are the leading players in the market?
  • Will near field communication (NFC) break through in China?

This report is available to eMarketer corporate subscription clients only. eMarketer clients, log in and view the report now.


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