Frost & Sullivan: Chinese Mobile Payments Market Poised to Double by 2023
Word from Frost & Sullivan is generally a thing to take seriously, which makes its latest report a bit hard to swallow. We know that the mobile payments market in China is huge, sufficiently so that its own central bank has to step in to remind its citizens that they are not in fact living in a cashless society. Despite this, Frost & Sullivan looks for the mobile payments market to explode, roughly doubling by 2023.
The new report, “Chinese Mobile Payments Services Market, Forecast to 2023,” reveals that the mobile payments market in China is expected to grow with a compound annual growth rate (CAGR) of 21.8 percent in the time between 2017 and 2023. Transactions, meanwhile, are poised to triple, hitting $96.73 trillion by 2023, up from $29.93 trillion currently.
That might seem downright impossible, especially given that the entire US GDP was $19 trillion in 2017, but there are factors contributing to this. The biggest is perhaps the virtual silence credit cards have in China; the Chinese culture commonly frowns on debt, even the temporary debt of a credit card, so they’re largely out of the picture.
The rise of ecommerce, however, means that cash only works so far, so an intermediary is called for. Throw in a growing middle class, complete with tourism and education abroad, and the picture means big growth in mobile payments. In fact, reports note that 65 percent of Chinese tourists have used mobile payments abroad, which is about six times more than a non-Chinese traveler.
The growing Chinese tourist class has long been a point of study, even with us here, so we know the impact that that’s having. The remaining factors also contribute, and should be expected; cultural refusal of credit and increased ecommerce all contribute. Really, as outlandish as it might seem, it’s hard to disagree with Frost & Sullivan’ s projections in anything but the finest points. The Chinese mobile payments market might not actually double—it’s already pretty big as it is—but it will almost certainly increase.
If all that can be done is quibble over extents and numbers, then it’s clear that the Chinese mobile payment market is one to watch.