Non-cash modes of payment are showing strong growth potential, report shows
|The headquarters of Alipay’s mobile payment service at e-commerce giant Alibaba Group Holding Ltd in Hangzhou, Zhejiang province. The country’s mobile payments soared to 9.64 trillion yuan ($1.59 trillion) last year. (HAN CHUANHAO / XINHUA)|
Mobile payments accounted for about 3 percent of the total non-cash transactions in China in 2013. It may not seem like much, but paying through mobile devices is showing strong growth momentum with transactions rising more than 200 percent year-on-year, a central bank report said on Monday.
According to the 2013 payment system review released by the People’s Bank of China, mobile payments experienced rapidly growing popularity in the country with the number of transactions up 212.86 percent to 1.67 billion. Volume soared 317.56 percent year-on-year to a total of 9.64 trillion yuan ($1.59 trillion).
Mobile payment was the only non-cash payment instrument that underwent triple-digit growth in China’s banking system in 2013. China’s non-cash payments, including debit and credit card payments, posted a growth of 21.92 percent year-on-year with transactions hitting 50.16 billion in 2013 and volume reaching 607.56 trillion yuan — an increase of 24.97 percent year-on-year.
Most of the non-cash payment methods, such as debit card payment and online banking, which offers personal computer-based banking services, showed double-digit growth in their transactions in 2013. Meanwhile, few of the non-cash payment methods, such as telephone banking, which offers banking services though call centers, showed decreases in their transactions last year.
Statistics from the central bank are based on records within the banking systems. They don’t include the substantial progress made in the third-party mobile payment market.
According to consultancy iResearch Group, transactions in China using third-party mobile payments, such as Alipay, the e-payment arm of Alibaba Group Holding Ltd, surged 707 percent year-on-year to 1.2 trillion yuan in 2013.
The building of Internet infrastructures and the growing number of Chinese getting access to the Internet through their mobile phones are only part of the reasons behind the adoption of mobile payments in China, said Li Ye, an analyst with Analysys International, a Beijing-based Internet consultancy.
Li said the main reason contributing to the skyrocketing growth of the third-party mobile payment market is that many e-payment companies offered incentives to encourage people to transfer their money or make purchases via mobile devices.
“Many of the Internet giants, such as Alibaba and Tencent Holdings Ltd, have been making efforts to push users from PC-based payment solutions to mobile-based ones because they see a promising future in mobile Internet. Payments are a gateway to secure as many users as possible in the era of mobile Internet,” she said.
Li said conventional banks are lagging behind in mobile payments compared with Internet companies. “Internet companies have built many ‘contexts’ for people to pay though mobile devices. For example, there are apps for people to buy cinema tickets or book taxis though mobile phones.”
“What banks offer right now are exactly the kind of services they offer on their websites,” she said, adding that the only opportunities banks have in mobile payment lies in near-field communication technology, which allows customers to use a special mobile phone equipped with specific smartcard wave bands to enable payment by placing a phone near a reader module.
People’s Bank of China Deputy Governor Li Dongrong said in an interview in early February China established its first national mobile payment platform using near-field communication technology as part of an effort to boost a modern form of non-cash payment.
The platform, which began trial operations at the end of last year, has already been connected to the mobile payment branches of seven organizations, including China Construction Bank Corp, China CITIC Bank Corp Ltd, China Everbright Bank Co Ltd, China UnionPay and leading telecom operator China Mobile Communications Corp.
Although the People’s Bank of China has given strong support to develop near-field-communication-based mobile payments, Wang Weidong, an analyst with iResearch, said there are many hoops to jump through before the technology can compete with the popular Internet-based mobile payment system.
Jiang Xueqing contributed to this email@example.com
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