December 10, 2014
China is going through a mobile commerce boom. As per a recent report by Alipay, 54% of the total transactions on Alipay, during the first ten months of this year, were from mobile devices. The Alibaba-backed payments service handles more than 80 million transactions per day. Last year, mobile oriented transactions had accounted for only 22% of all the payments. Alipay has over 300 million registered users and over 190 million downloads of its wallet app. This year, China witnessed mobile internet access overtaking desktop internet access as well.
Interestingly, according to the report by Alipay, differing trends were observed in a comparison of mobile payments in urban areas with those in rural zones. Mobile payments were relatively higher in remote areas, and in some prominent cities in rural areas, mobile based transactions accounted for 58 to 62 percent of overall transactions. This percentage was apparently low in urban areas with cities like Beijing, Shanghai and Guangzhou accounting for 24 to 29 percent of overall transactions.
Considering the actual consumer spend via mobile initiated transactions, 55% of total transactions came from five of China’s most developed provinces. Considering overall volume of amount transacted by Alipay, mobile accounted for less than 50%. Even on the Singles’ Day, which saw a record $9.3 billion processed by Alipay, mobile’s share was 43%.
Mobile commerce has certainly witnessed significant growth in China and it can be attributed to factors such as lack of broadband telecom infrastructure, high costs of desktops, etc. The falling costs of owning smartphones in China contribute to this growth, since smartphones are a primary medium for accessing the internet. Tech firms in China are trying to address the technology gap in rural areas since smartphone adoption is now nearing saturation in urban areas.
To cite an example, Tencent recently showcased its ‘mobile internet village’ program as part of which it provides smartphones and free WiFi in certain rural areas. Manufacturers like Xiaomi are bringing in affordable mid and low range phones to the market. It is evident that China’s next smartphone boom would definitely come from the lower end of the price scale with technology making it possible to reach out to newer demographics.
Alipay is contributing to the payments revolution in China in a big way. Since its inception in December 2004, the company has handled more than 42.3 billion payment settlements. The company is helping Chinese consumers pay for online shopping purchases, utility bills, credit card bills, mobile recharges and many more goods and services.