Payment Methods in China: How China Became A Mobile-First Nation

May 21, 2021

China has emerged as a global leader in commerce and technological growth over the course of the past decade. The country has made monumental progress in digital access by enhancing smartphone access to a wide majority of its population. Digital payments have been a cornerstone of the financial movements across the country, with all consumer segments rapidly moving towards mobile payments. The transition across the country has been backed by technological growth throughout the country.


The statistical insight into the national consumer trends presents an insight into the extent of the digital transition across the country. Survey points to over 92% of the urban population actively using digital wallets and payment mechanisms, including Alipay and WeChat Pay as primary methods of payment. The phenomenon has been actively catching on in the rural areas of the country as well, with trends showcasing a yearly growth of over 11%.

The statistics provided by the country’s National Bank reflected the volume of digital payments increasing consistently on a yearly basis. The periodical statistics released by the bank indicate over 30 billion yearly mobile transactions reflected a yearly increase of over 73%.

Role of Covid 19 in Enhancing Mobile Payments Across the Country

The Covid-19 pandemic was a detrimental force for the global economy, with widespread disruptions in the working structure of the global business. China was one of the most badly impacted countries from Covid-19, being ground zero of the pandemic. This was a major setback for the growth rate and working structure of people across the country. The primary boost in digital usage was a major byproduct of the conventional payment structure being completely disrupted by the social distancing regulations. The country’s central authorities have been encouraging people to move towards online payments, smartphones, and QR as a way of mitigating the spread of the infection and reducing the odds of contracting Covid.

Users have also developed additional trust in digital payment methods due to the governmental guidelines and protocols being refined for digital payment.

Mobile Payment User Penetration 

The country’s payment data has also pointed towards the average transaction volume for leading providers increasing extensively, in part driven by the Covid-19 lockdown and social restrictions.

Similar transitions have been observed across the country for restaurant payments, with WeChat data pointing to a 447% increase in cashless payments. The change is representative of the national trend shifting away from cash-based transactions to a safer cashless medium. The country has also rapidly expanded the development and acceptance of digital payments across leading vendors by facilitating digital payments and paving the way to a mobile payment revolution. This has been in stark contrast to other countries, where the growth process has gradually developed from credit cards to mobile payments. Even though similar trends have been observed in other Asian countries, the rate of adoption and growth observed in China has surpassed the usage observed in other countries.

Why and How Do Mobile Payments In China Work? 

In China, mobile payments function with the integration of smartphone technology and innovative financial mechanisms. Payment companies across China are following the national directive to innovate payments by providing digital integration across leading payment technologies. Technologies like QR payments, NFC, and other innovative payment technologies have been formulated as a result of the collaborative effort of smartphone manufacturers, network providers, and financial institutions. Leading providers like Visa and UnionPay have been extending the compatibility of the payment platforms by integrated the technologies in their payment platforms to provide increased convenience to users within the country.

Payments with local vendors work with simple account integration across leading applications, including WeChat Pay and Alipay, to make it easy for customers to pay and for the vendor to receive the payment directly in their application wallets. This also removes the added hassle of having to go through secondary payment handling sources and streamlines the payment structure within the country. The conventional banking cycle can be highly time-consuming and add multiple layers of banking assistance to manage finances. In that scenario, opting for a smart payment partner can be a much better option.

Exploring A Reliable Cross Border Payment Partner? Choose AP-1 Business

For business owners who make frequent transactions with vendors in China, opting for AP-1 Business Account can be a great way of streamlining their business process by having a partner that allows them to skip multiple intermediary fees and optimize their business process. The streamlined process flow helps businesses reduce the transaction time involved in international payments and save the effort spent tracking payments. The application’s efficiency in cross-border payments into China also aid domestic vendors’ cash flow, which builds the trust and relationship between businesses and their suppliers.

AP-1 Business also enhances profitability by providing access to the best and direct SGD to RMB forex rates for business owners through the UnionPay network. The speed through which payment reaches the supplier in China is also a key advantage, at T+1. This improves transaction management and helps clients cultivate better relationships with their suppliers. AP-1 Business provides efficient and affordable cross-border payment services that are ideal for all business owners looking to have effective relationships with domestic suppliers in China.

Where Can People Use Mobile Payments In China? 

With the popularity of digital commerce platforms across the country, mobile payment has become the most commonly used form of payment in China. Consumers can simply make payments to digital platforms to handle their orders and get the products delivered to their doorstep. The utility bill management process has also been simplified with the usage of digital payments, with users being able to pay their bills through their wallet applications.

Even for conventional vendors, the payment formats have shifted from conventional paper-based payments to digital payments relying on QR and barcode technology. People can simply hop on over to their nearest stores and use mobile payments to make day-to-day purchases. NFC technology has been a cornerstone of enabling digital payments by providing connectivity between vendors and smartphones. The technology has been present in public stalls and restaurants to facilitate payments and management. Aside from private usage, the governmental charges and bills can also be seamlessly paid through mobile applications to provide a convenient payment structure to the people.

Role Of Mobile Payments Methods In Optimizing Business Between Foreigners and Locals 

Given the shortcomings of conventional payment methods, foreign businesses are increasingly shifting towards mobile payments as a way to optimize their business. Part of that process has been through the adoption of digital payment methods such as AP-1 Business, which facilitate digital payments to local suppliers. The usage of these mobile accounts allows account holders to have a fast-paced and guaranteed payment format.

Here are some of the primary ways businesses are adapting to mobile payment trends in China:

B2B - Using Mobile Payments to Pay Chinese Suppliers

International companies are providing digital payment options to offshore businesses that require cross-border payment solutions that are faster and less hassle. Mobile accounts like AP-1 allow simple payment receiving in the local currency to simplify the payment process for foreign businesses and local suppliers and help them have a seamless payment experience.

China is the world’s top largest export market and has become a significant market force around the globe. Much of the produce from China supports global supply chains and drives trade. It is important for foreign brands to harness mobile payments and make it simple for Chinese suppliers and vendors to receive payments for their goods sold.  

B2C - Have Official Accounts On Popular Channels

In the mobile payment domain, Alipay and WeChat are established as Chinese market leaders. Due to their inherent simplicity and functionality, the applications are commonly used in the local market to enhance marketing and make it simple for customers to conduct payments. Companies can also offer coupons and payment vouchers that can be used on Alipay and Wechat to attract Chinese consumers. The coupons can be launched through the application during popular national events, including the Chinese New Year, to attract customers and gain traction. These channels are used by millions of Chinese users regularly and provide businesses with a viable way to reach out to their primary customer segment and enhance user interaction.

Conclusion

China’s ascent to becoming the global leader of digital payments and smart consumer patterns has been centered around the culmination of factors ranging from governmental policies to broader consumer trends. Digital usage within the country has been rapidly expanding, with the trends showcased by the simplicity of digital payments. A key part of the usage has been centered around the production backbone of the country, enhancing the influx of cash flow into the country. There was a requirement for the business owners and local entrepreneurs to have viable cashflow management processes that reduced the hassle of fund transfer and currency conversion to enhance optimization and improve the functional process. Shifting to a mobile-oriented digital economy was the ideal way for global clients and local production owners to connect and pave a developing way forward. The added benefits of the digital economy have been emerging with factors like improved transaction speed and security. Users are now able to seamlessly manage their payments and finances with the assistance of digital tools and features within the application.

Covid-19 was also a key part of the digital transformation by showcasing the fact that the future of the global economy was digital. The pandemic limited conventional shopping and payment options and led the shift to a major behavioral transformation which witnessed consumers opting for digital methods of payment and purchasing. The transition has led to digital vendors offering streamlined digital services to help consumers manage their foreign payments. Digital accounts like AP-1 are a great way for foreigner individuals to pay with ease in China through QR codes and for foreign businesses to manage cross-country payments and get optimal conversation rates within China without having to deal with long transaction times through conventional banking channels.  


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