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Payment Preferences - China - August 2017

Published By :

Mintel

Published Date : Aug 2017

Category :

Banking

No. of Pages : N/A

The usage rate of mobile payments was only 1 percentage point higher than that of credit cards in 2015. After just one year, transaction values via mobile payments has already doubled that via credit cards. Even cash has become the second most used payment method. High earners in tier two to three cities deserve more attention as they have shown the strongest willingness to move towards cashless.
Table of contents

OVERVIEW
What you need to know
Covered in this report
Figure 1: Definition of different monthly household income groups, by city tier, November 2016
EXECUTIVE SUMMARY
The market
Figure 2: Share of third-party online and mobile payment among total market, China, 2012-17 (est)
Figure 3: Best- and worst-case forecast of total payment market value, China, 2012-22
Companies and brands
Figure 4: Third-party mobile payment market share, 2014-16
The consumer
Mobile payments are now the top payment method
Figure 5: Payment methods used, April 2017 vs May 2016
Usage rate: Alipay Wallet usage twice that of WeChat Wallet
Figure 6: Last payment method used, April 2017
Figure 7: Mobile payment functions carried out on WeChat and Alipay Wallet, April 2017
Payment methods driven by habits rather than incentives
Figure 8: Drivers of payment selection, April 2017
Figure 9: Last payment amount, April 2017
Opportunities in lower tier cities
Figure 10: Going out with or without cash, by city tier, April 2017
What we think
ISSUES AND INSIGHTS
Is China leading the cashless society trend?
The facts
The implications
Is WeChat Wallet finally about to replace Alipay?
The facts
The implications
What is the payment preference of high income groups?
The facts
The implications
Figure 11: Payment preferences, by consumer matrix (city tier and monthly household income)
THE MARKET WHAT YOU NEED TO KNOW
Mobile payments are already twice as large as credit card payment
Habit formed while incentives continue
MARKET SIZE AND FORECAST
Third-party payments: doubling in size every year
Figure 12: Total third-party payment and growth rate, China, 2012-16
Third-party mobile payments double credit card payments in 2016
Figure 13: Payment amount and growth rate of third-party mobile and credit card payment, China, 2012-16
Mobile payments to exceed PC online payments in 2017
Figure 14: Share of third-party online and mobile payments among total market, 2012-17 (est)
Projected to reach RMB 726 trillion in 2022
Figure 15: Best- and worst-case forecast of total payment market value, China, 2012-22
Figure 16: Best- and worst-case forecast of mobile payment market value, China, 2012-22
Figure 17: Best- and worst-case forecast of online payment market value, China, 2012-22
MARKET DRIVERS
Continuous incentives
Figure 18: Alipay Wallet bonus money campaign
Female high earners in their 20s most willing to go cashless
Penetration of smartphones
KEY PLAYERS WHAT YOU NEED TO KNOW
WeChat Wallet challenging the leading position of Alipay Wallet
Alipay and WeChat Wallet are competing on different dimensions
Taking a step further to a cashless society
MARKET SHARE
Intense rivalry between two mobile payment giants
Figure 19: Third-party mobile payment market share, 2014-16
Smaller players struggle to compete
Top five players remain unchanged in third-party online payments
Figure 20: Third-party online payment market share, 2014-16
COMPETITIVE STRATEGIES
Leveraging the power of transaction data
Figure 21: Payment analysis of Alipay Wallet
Expansion abroad by co-operating with overseas payment companies
Apple Pays co-operation with bank cards
WHOS INNOVATING?
PBoC is developing digital currency using blockchain technique
Staff-free convenience store
Figure 22: Alibabas staff-free convenience store, TaoCafe
Figure 23: A BingoBox
Virtual gifting card
Figure 24: A virtual Starbucks gift card that can be sent via WeChat
Figure 25: Virtual cinema gift cards on WeChat Wallet
THE CONSUMER WHAT YOU NEED TO KNOW
Mobile payments exceeding cash as the top payment method
Habit of using mobile payments has been formed
Opportunities in lower tier cities
USAGE OF PAYMENT METHODS
Third-party mobile payments penetrate further
Figure 26: Payment methods used, 2017 vs 2016, April 2017
Gap between different tier city consumers in card usage
Figure 27: Gap between tier 1 and tier 2&3 (as benchmark) consumers on payment methods used, April 2017
10% of people have not used cash in past six months
Mobile NFC payment users tend to be high earners
LAST PAYMENT METHOD USED
Alipay Wallet still dominates
Figure 28: Last payment method used, April 2017
DRIVERS OF PAYMENT SELECTION
Habit over incentives
Figure 29: Drivers of payment selection, April 2017
Key drivers of different payment methods
Figure 30: Drivers of payment selection, by selected payment method, April 2017
PAYMENT AMOUNT
Choose payment methods by spending amount
Figure 31: Last payment amount on average, by payment method, April 2017
Figure 32: Last payment amount, by payment method, April 2017
WECHAT VS ALIPAY WALLET
Different usage occasions
Figure 33: Mobile payment function used on WeChat and Alipay Wallet, April 2017
Credit services most important for retaining 25-39s
Alipay enjoys a larger user base in city services and paying utility bills
ATTITUDES TOWARDS PAYMENT METHODS
More people in tier two and three cities are going cashless
Figure 34: Going out with or without cash, by city tier, April 2017
yet there is still space for penetration
Figure 35: Going out with or without cash, by city tier, April 2017
More people prefer pre-paid cards with discounts
Figure 36: Prepaid card preference, April 2017
People want more flexibility when it comes to virtual gifting
Figure 37: Online gifting preference, April 2017
MEET THE MINTROPOLITANS
Small gap in using mobile payment between MinTs and Non-MinTs
Figure 38: Gap of payment method used, by MinTs and Non-MinTs (as benchmark), April 2017
Figure 39: Last payment method used, by MinTs and Non-MinTs, April 2017
MinTs welcome next generation payment methods
Figure 40: Attitudes towards future payment methods, by MinTs and Non-MinTs, April 2017
APPENDIX MARKET SIZE AND FORECAST
Figure 41: Total market value of third-party payments, 2012-22
APPENDIX MARKET SEGMENTATION
Figure 42: Total market value of third-party online payments, 2012-22
Figure 43: Total market value of third-party mobile payments, 2012-22
APPENDIX METHODOLOGY AND ABBREVIATIONS
Methodology
Fan chart forecast
Abbreviations

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