A Surge In Mobile Payments Ahead for China?

We all knew that mobile payments were big in China, but a new forecast from eMarketer says that what’s big already will only get bigger. The eMarketer study suggests that just over three quarters of smartphone users—76.3 percent—are using phones to pay for items in 2017. That’s up substantially from 2016’s figures, and growth will continue, albeit at a reduced rate, for about the next five years.

The eMarketer figures noted that 62 percent of users were using phones in payments in 2017, which means the projected 76.3 percent in 2017 is a serious jump. However, the eMarketer figures are suggesting limited growth ahead through 2021, where the number will reach a projected 79.3 percent. Reasons cited for the gains include perceptions of safety, convenience and even greater speed in transactions.

Any of those numbers would be impressive enough as it sits, but it only dazzles further when compared to other major markets. Germany, for example, has just 23 percent of smartphone users engaging in mobile payments, and in the United States, it’s 31 percent. Still big numbers, but nowhere near the nigh-ubiquity of the Chinese market.

Senior forecasting analyst for eMarketer Shelleen Shum noted “With incentives for both users and merchants by incumbents WeChat Pay and Alipay, adoption has spread rapidly. Even those living in the rural areas are starting to adopt this method of payment, and the speed with which China has transitioned away from cash is truly remarkable and has lessons for other countries moving toward a cashless society.”

What’s odd here is the jump from 2016 and 2017, but the comparative flatness thereafter. There’s room for a certain amount of skepticism here, after all, but it’s obvious that the Chinese have been eagerly taking up the mobile payments banner for some time now. Granted, the closer you get to 100 percent, the slower the gains have to be. There will always be a certain amount of people who won’t stop using cash unless they have absolutely no other option.

Still, it will be a while before China goes cashless, and Sweden may well beat it to the punch. It’s a long way to go before either one goes completely cashless, though, so we’ve got plenty of markets to watch in the meantime.