China Payments Research

According to the latest China’s Payment Report from People’s Bank of China, up to 2012 Q1, the total number of bank card in circulation grew 5.2% quarterly to 3.1 billion, reaching about 2 bank cards per person. Among them, the total number of credit cards reached 290 million, an increase of 1.8% from end of 2011Q4.

According to Eguan, a China-based consulting company, the total transaction value of China’s 3rd Party Online Payment market reached 758.3 billion RMB in the first quarter of 2012.

The quarterly growth rate declined because of seasonal factors and the influence of the holiday - especially because online shopping and air travel which accounts for the largest part of the total online payment market; both declined rapidly in the first quarter.

The Chinese mobile payment market is virtually doubling in size every year and is expected to be worth more than US$80 billion with 441 million active users by 2015, according to the latest report from Kapronasia. China has already overtaken the US as the largest smartphone market in the world; the number of mobile payment users will dwarf other markets worldwide.

On March 28, 2012, Trunkbow, a provider of Mobile Payment services in China, announced that it has teamed up with CUP (China Union Pay, the only bankcard switch in China) for the development and deployment of a mobile online-to-offline payment system which will be launch in Q2 2012.

According to a study released by research firm Analysys International, in Q4 2011 online payments in China reached USD 117.3 billion, up by 30.9 percent from Q3 2011. The growth was largely down to an increasing demand for online shopping, travel booking and gaming. Alipay, an affiliate of Alibaba Group, took 46 percent of the total online payments, while internet company Tencent took about 25%. Government support for new market participants also helped growth as the People's Bank of China (PBOC) granted over 70 new licenses to non-financial organizations engaged in payment and settlement businesses in 2011 bringing the total to more than 100 licensees.

On December 31st, New Year’s eve, the PBOC finally issued another 61 third-party payment licenses which probably were the best holiday gifts for the third-party payment companies who had been waiting for the new licenses.

According to PBOC, in 2011 Q3, China’s payment system processed 3.9 billion transaction volumes amounting to 510 trillion RMB. HVPS volume keeps a rapid 35% growth rate year on year; BEPS volume especially online inter-bank clearing, has increased at phenomenal rate, mainly driven by faster growth in the area of online petty expense payments.

 

Payment System Transaction Volume Contribution %, 2011 Q3

Payment System Transaction Value Contribution %, 2011 Q3

High-Value Payment System

2.48%

68.14%

Bulk Electronic Payments System

3.65%

0.89%

Intra-city Bill Clearing System

2.65%

3.40%

China Foreign Exchange Payment System

0.00%

0.09%

Intra-bank Transaction Settlement System

46.51%

26.70%

CUP Inter-bank Clearing System

44.71%

0.78%

According to EnfoDesk Research, China’s third-party online payment total transaction value reached 88.9 million dollar in 2011 Q3, with 22.4% growth rate quarter on quarter, keeping a high-speed increase. After PBOC officially released third-party payment licenses in September, main players accelerate the speed of their market expansion and make the market more competitive.

As commonly seen as the nearest equivalent to Paypal in the Chinese market, Alipay, a Chinese online payment processor affiliated with the Alibaba Group, has enjoyed enormous popularity amongst Chinese netizens since its launch in 2004. As of December 2009, Alipay was said to possess over 250 million registered users and to oversee 5 million transactions worth ¥1.2 billion on a daily basis.

On June 8th, China Union Pay (CUP), China’s bankcard association, released two non-card payment products – Union Pay Online Payment and Mobile Payment thus completing the setup of the company’s non-card online payment platform, built on Union Pay’s bankcard transaction settlement system and characterized by its open type, advanced technology, high efficiency and security.

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