Today almost all of the headlines are about Apple's iPhone launch and that is well deserved. I've been a iPhone user myself for 10 years and am excited for the new phone (but not the rumored $1000 price tag). Since the iPhone news will be covered by a million different sites, let's look at the other side of the globe where China is a very different market and one changing at breakneck pace. Did you know that last year, Chinese consumers spent $5.5 trillion (yes Trillion) through mobile payment platforms? To put that in perspective that's about 50 times more than their American counterparts where Apple pay just hasn't caught on. So why is China succeeding where Apple is not? Let's take a look at China's mobile payment market.
The move to cashless society
In the US, people's preferred method of payment is credit card. We are used to carrying plastic in our wallets and don't mind running up some debt. Credit cards haven't taken hold the same in China and that has allowed mobile payments to step in to fill the payment gap. For the most part, Chinese are linking their bank card (ATM/Debit) to their mobile app to make most of their purchases.
In a recent study called "2017 Mobile Payment Usage in China," more than half of WeChat users said they conduct less than 20% of their monthly transactions in cash. Furthermore the study found that WeChat users said they only pay with cash when no other payment methods are available (73%) or during small transactions (46%). Empty pockets are the new fashion with 40% of Chinese carrying less than RMB 100 cash (roughly $15) in their wallet -- and for the majority, RMB 100 can last up to a month.
Service industries lead the way
This chart shows how much mobile payments dominate the Chinese lifestyle and how little credit cards come into play. Service industries like dining, retail, entertainment and travel are the areas that excel in mobile payments. This type of payment is so ubiquitous that 40% of food stand transactions are by mobile. In retail, 68% of merchants accept mobile payment methods with similar penetration in supermarkets and malls.
China is clearly leading the way in mobile payments and that will continue well into the future. The two leaders in the space are WeChat (Tencent) and AliPay (Alibaba). They are the giants in the sector and will dominate for years to come.