• Magdalena Gołębiewska

China has the most sophisticated e-payment system on the world

Updated: Jun 11, 2019

China is light years ahead payments revolution in Europe, and I believe, in US (however my area of expertise is rather connected with Europe and Emerging markets, not US, but I think it is fair statement).


In China you can easily live cashless. Paper free, and cards free! Only mobile!

That digital revolution is led by two big players – Alipay and Tenpay (essentially WeChat Pay). Paying with your phone in China has become a daily routine. According to a survey, 92% of people in China’s largest cities use WeChat Pay or Alipay as their main means of payment. And the phenomenon is the same in rural China: 47% of the rural population is reported to use mobile payments very regularly.


Let me draw you a picture here. You are in the restaurant, you want to pay the bill, what will you hear from the waitress in Europe? Well, it will be:

"Cash or card?"

And what will you hear in China? Not exactly the same. You will most probably hear:

Zhifubao or Weixin?” ("Alipay and WeChat Pay?")

You will still be able to settle in "old fashioned" way however, most of Chinese clients use their phones now. And they simply scan QRCodes. Remember those? They were popular in 2012 and went silent for a while in Europe, however now seems to be coming back (link)


Coming back to China.

Let's face it - They are leading the world in online payments. Buying goods and services using smartphone apps that provide mobile-payment services has caught on here like nowhere else. The rate of adoption is dizzying in a country that even state media acknowledges is hurtling towards a cashless society. Even beggars in the city are using Alipay and WeChat Pay (Zhifubao and Weixin, respectively, in Putonghua).


Chinese people have jumped from using cash to using phones without the middle steps of cheques and bank cards. In the same way like Europe jumped from cash to cards and online payments skipping cheques, or Africa from desktop payments to mobile payments.


It happened so fast, that we can simply say the change was drastic.

As showed on below graphic - over 80% of payments in China were mobile in 2018. 5 years ago it wasn't even 20% (!).


Why do mobile payments in China work?


This increase in the use of smartphone payments in China is linked to the growth of e-commerce and m-commerce. The share of online sales still seem relatively low, however it is increasing very quickly.


Experts estimate that mobile commerce in China will reach about $1.5 trillion in sales in 2019, representing a quarter of the country’s overall retail market.

How do mobile payments in China work?


Of course, mobile payments have been so successful in China because they are fast and straightforward. And this speed is possible thanks to the QR codes. In China QR Codes are everywhere; even street musicians have a QR Code to collect money.


There are two ways to pay via QR Codes in China:

  1. The customer scans the seller’s QR code, which is very often printed and visible at the checkout, on restaurant tables and even on products in some stores. The customer then chooses the amount and can send the money directly to the seller.

  2. The customer shows the QR code displayed on his smartphone, and the seller scans it. This method is even simpler and faster because the customer has nothing to do; it is up to the seller to select the amount that will then be deducted from his mobile wallet.

China has therefore quickly adopted mobile payment, and this is mainly because it is very easy for sellers. Unlike Apple Pay, where sellers have to buy technology to receive a payment, in China, a simple piece of paper printed with the QR code is enough. :) Again, we have confirmation - make it easy and simple and you will win. Especially on developing markets.


As mentioned on the beginning of the article, the market belongs to 2 players - Tenpay (belongs to Tencent) and Alipay (belongs to Alibaba). There is some small usage of cards, however it is rather not popular.


In an "Others" bucket we have mostly PayPal, who enabled their services to Merchants and increase payments through PayPal from abroad. Still long way to go, but it seem that US giant can in long term became a third player, alongside with AliPay and Tenpay, but here we have a couple of more questions marks for example the political situation and "trade war" between US and China.


I have to say that QRCodes are a smart and easy way to pay, however, IMO, there are better ways to pay which will come. The question is what will come next. I will quote here Luis Galán, chief executive of Chinese e-commerce consultants 2 Open:

It’s just a matter of time before we won’t even need a device to pay. Our fingers, our irises, even our ears will be payment devices.

Sources and more input: 1. 2.