Low credit card usage and the increasing popularity of e-Commerce coupled with a growing middle class in China have accelerated the growth of mobile payments in the market.
The Frost & Sullivan’s report, Chinese Mobile Payments Services Market, Forecast to 2023, forecasts mobile payments services in China to grow at a compound annual growth rate (CAGR) of 21.8% from 2017 to 2023, with transactions growing three-fold from US$29.93 trillion to US$96.73 trillion over this period.
e-Commerce, travel and overseas education are also fueling an increase in cross-border payment transactions. Frost & Sullivan says nearly 65% of Chinese tourists have used mobile payments abroad, approximately six times higher than the average non-Chinese traveler.
“In China, e-Commerce is a powerful incentive for users to purchase smartphones that enable mobile payment features. The social aspect that mobile payments bring can serve as an integral step in building trust and learning about digital services, especially in rural communities,” said Mei Lee Quah, industry principal analyst, Information & Communication Technologies (ICT) Practice, Digital Transformation at Frost & Sullivan.
The total number of active mobile payment customers is expected to reach 956 million by 2023 from 562 million in 2017 which will attract additional investments from mobile payments market participants. To date, there are 250 licensed payment service providers in the country.
Frost also identified rural region and the elderly as new market opportunities. The analyst says China will continue to be a major player in the global mobile payment services market and service providers in the country will continue to focus on improving and enhancing security on mobile payment platforms.