Chinese mobile payments are expected to continue to surge overseas this year, as tech-savvy millennials increase spending on travel and purchases, analysts said.
Outbound spending by Chinese tourists via mobile devices in 2016 jumped more than sevenfold year-on-year, with the number of transactions soaring by 730 per cent, the country’s largest third-party payment provider, Alipay, said on Wednesday.
The prolific growth was largely driven by China’s millennials —those born between the early 1980s and late 1990s — who are accustomed to making purchases on smartphones. They were responsible for as much as 85 per cent of all overseas wireless payments through Alipay last year.
Transactions made via mobile wallets could surge to 90 per cent of the total business volume this year, up from 71 per cent last year, as more
millennials travel and spend, according to James Yan, research director at Counterpoint Technology Market Research.
The mobile shopping mania is set to continue for online and brick-and-mortar businesses, fueled by expansion overseas by Alipay and archrival WeChat Pay, which is run by internet giant Tencent, Yan said.
The two, which Counterpoint said claimed over 80 per cent of China’s mobile payment service, have taken great leaps to broaden overseas mobile payment service offering.
With 450 million users, Alipay is accepted by more than 80,000 merchants worldwide in 18 currencies, including high-end department stores such as Harrods and Printemps, which are meccas for Chinese consumers. It hopes to serve 2 billion customers over the next decade around the world, with 60 per cent of its transaction volume coming from outside China.
Meanwhile, Tencent is quickly growing its market share to around 25 per cent, as it anchors on a surging number of Chinese tourists who are among the 762 million users of its popular mobile app WeChat, which enables cashless payments.
More than 10 countries and regions now support WeChat payments, and the number is expected to explode within a year or two, the company said.
Xu Mingqi, a senior researcher at the Shanghai Academy of Social Sciences, said younger consumers are big spenders overseas.
“Being mobile-crazy and open-minded, a lot of them enjoy a far higher standard of living and are exposed to opportunities to study and travel
abroad,” he said.
Asia-Pacific markets stand to benefit the most, with the biggest upticks in mobile spending in South Korea, Thailand, Hong Kong, Japan and
Australia, according to Alipay.
Alipay claims around 65 per cent of the country’s 12 trillion yuan ($1.73 trillion) mobile payment market, according to Counterpoint. Overseas
transactions now account for less than 10 per cent of all mobile-enabled transactions.
China’s mobile payment market is projected to maintain annual growth of 20 per cent to around 18 trillion yuan in 2018, according to estimates
from consultant iResearch.
“The logos of Alipay and WeChat in overseas shops and airports make me feel at home. I no longer need to carry a large amount of cash or worry about overcharged transaction fees, and I can even get tax refunds through such services,” said Shen Ziying, a 31-year-old banker in Shanghai who travels to Japan three times a year.