Alternative payments are the most popular method to pay for online purchases
Alternative payments methods such as mobile and digital wallets dominate the e-commerce space in China and collectively account for 72 per cent of market share in 2022, finds the 2022 Financial Services Consumer Survey of GlobalData, a leading data and analytics company.
Chinese e-commerce market, the world’s largest, is expected to register 10.5 per cent growth to reach CNY14.5 trillion ($US2.3 trillion) in 2022, as consumers are increasingly shifting from offline to online. It is set to increase at a compound annual growth rate (CAGR) of 8.7 per cent between 2022 and 2026 to reach to CNY20.2 trillion ($US3.2 trillion) in 2026.
The market evolved rapidly during the last decade, supported by rising internet and smartphone penetration, increasing consumer confidence in online shopping, the emergence of e-commerce platforms and availability of alternative payment tools.
The COVID-19 pandemic further accelerated the e-commerce activities in the country with increasing number of consumers switching to online channels to avoid making physical contact with cash and POS machines.
Ravi Sharma, Banking and Payments Lead Analyst at GlobalData, comments: “The Chinese e-commerce payments landscape is dominated by alternative payment solutions, with Alibaba’s Alipay and Tencent’s WeChat Pay being the most popular among consumers.”
Alipay benefits as the primary payment tool on all the platforms owned by its parent Alibaba group, by leveraging its large retail customer base.
WeChat Pay, which is offered on WeChat messaging app, has changed the way Chinese consumers shop online by expanding its services beyond social media messaging to offer a full range of shopping and payment services to over one billion users.
International payment solutions such as Apple Pay, and PayPal are also available in the country. However, they have a long way to go before they can compete with established local brands.
Meanwhile, debit, credit, and charge cards’ share in the overall e-commerce transaction value was 14.1 per cent in 2022. While the share of cards in the overall e-commerce transaction value is low, their usage is driven by the reward benefits at partner merchants. Cash has seen constant drop in market share for online purchases due to growing preference for electronic payments.
Sharma concludes: “Alternative payments are the most popular method to pay for online purchases, and their popularity is expected to grow in the coming years as well with Alipay and WeChat Pay continue to hold their duopoly in the market.”