China’s boom in digital payments

by Annika Backe

September 28, 2017 – Quick and easy, that’s how we like to pay. In our internet and smartphone era, the companies which offer their customers a digital payment option are the market leaders. This trend is especially sharp in China.  

Many Chinese people consider their mobile the device-to-have for paying, too. Photo: micadew / Wikimedia Commons / CC BY-SA 2.0.

Many Chinese people consider their mobile the device-to-have for paying, too. Photo: micadew / Wikimedia Commons / CC BY-SA 2.0.

A provider for life

According to media reports, more than 600 million people in China have a WeChat account already. Launched by Tencent Holdings Ltd. in 2011, the WeChat service enables its account holders to send messages, pictures, and videos, similar to the WhatsApp Messenger that is popular in this part of the world. To call a cab or book an appointment with the doctor, however, additional apps have to be installed on mobiles phones in Europe. In China, you can accomplish all this through just one WeChat account. 

Mobile payments

More and more people also use it for payments. It only takes a few clicks to transfer money in China, and to paying the bill cashless in stores, and places like Starbucks. As the Financial Times reports, in 2016, the value of mobile cashless transactions more than tripled the 2015 amount in China. $5.5 trillion were transferred via WeChat and its main rival in the market, AliPay. 

While many people like this kind of payment because it makes things so easy, critics point out that this may promote desires. If you manage the greater part of your life via one single app, you will give away all sorts of private data to its provider – not just about how you like to pay and what your favorite shopping items are, but also information about personal relations, leisure-time activities, illnesses. 

Digital payments – digital money

WeChat provider Tencent plans to further profit from the current boom and has started in 2017 to offer this payment function in Europe as well. As for China, it is the first company that has acquired a banking license. The virtual wallet could thus evolve into a checking account, and a competition for the traditional banks. 

The banks in turn currently discover the digital money themselves. And so, in 2014, the People’s Bank of China (PBoC) has started to closely monitor how Bitcoin and other currencies are developing. Media say that the bank has only recently opened its own research institute for crypto currencies and is about to issue its first blockchain-based digital money. 

To read the mentioned Financial Times article, please click here.

How it works, and what digital payments in China means for other countries, examines this contribution on China Internet Watch. 

On CoinDesk, you can read more about “China’s Central Bank opens a digital currency research institute”.

How the Chinese government apparently tries to use the load of data transmitted via the mobile phones to better control its people, is emphasized in this article in The Independent online. 

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