China remains the world’s major growth engine. Explosive annual GDP growth averaging 9.09% from 1989 until 2022 has transformed the country into an economic superpower.
The last few years have been very busy in terms of payments. From a reality where cash was predominant, we have moved to a network of multitudes of digital payments driven by the growth of online shopping during the COVID-19 pandemic. These new payment options have shown the benefits that their implementation in e-commerce can have.
Consumer spending is a significant contributor to China’s growth. As household incomes have increased, more consumers have wanted to purchase products from outside China, making this market a magnet for consumer brands and merchants from around the world.
To sell in China through e-commerce, international brands must make payments available through Chinese payment systems otherwise obstacles could arise during the purchase phase. Since most of the payment methods used in Europe and America are not used often in China, it is necessary for international brands to offer a payment method that is also valid in China otherwise it is as if they do business in China only half.
China’s transformation into a cashless society, its massive ecommerce market, and high mobile and online payment penetration are expected to propel growth in the payments market at a compound annual growth rate (CAGR) of 8.8% from 2022-2027.
Most popular mobile payment methods in China are:
Alipay
It is the leader in mobile payments, one of the most popular methods in China, and an innovative technology product. It belongs to the electronic giant Alibaba and is known as the Paypal of China, due to the security and ease of use it provides to the user.
WeChat Pay
WeChat started out in 2011 as an ordinary application, but quickly became one of the most popular applications in China. It is a hybrid between Marketplace, messenger and social network with a payment system in stores. WeChat Pay is an in-app payment feature, where users can complete the payment process with their smartphones.
Yet despite tech disruption, China’s entrenched major banks continue to dominate the financial sector, with bank accounts offering a convenient payout option for transactions. Meanwhile, debit and credit cards continue to be used widely. The dominant player, UnionPay – the world’s biggest card payment organisation – has the largest share of global card expenditure, with 45%, largely driven by spending in China. In 2020, UnionPay International reported online transaction volume grew by nearly 15% year on year.
According to a Statista Global Consumer survey the most popular Chinese payment methods are Alipay, WeChat Pay and Union Pay as listed above, they respectively detained 93%, 86% and 43% of the Chinese payment methods. They’re followed by other 5 very popular methods are constantly increasing: JDPAY.COM (24%), TenPay.com (20%), Apple Pay (19%), Best Pay (16%) and Huawei Pay (10%).
It is important to know which payment methods your customers adopt, especially if they are Chinese. Eliminating the distances also in terms of payment with your customer is a fundamental step to increasingly increase your earnings abroad.
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