China Payments Research

At the start of this month, leading global supplier of information and communications technology (ICT) Huawei had joined the board of Europe’s 5G Infrastructure Association.

According to PBoC 2013 Annual Report, the payments industry in China is growing fast, 17% in 2013 alone and 25% on average in the last five years.

After setting up its strategy as “All in Mobile E-Commerce” at the beginning of this year, Alibaba has been gradually building up its Online2Offline business - now focusing on healthcare. 

The latest payment report released by PBOC shows that by the end of 2014Q1, the cumulative number of bank cards issued reached 4.39 billion. Debit cards are still the most widely used card type, accounting for approximately at 3.97 billion.

The latest payment report released by PBOC shows that in 2014Q1, electronic payments kept a steady growth with the most eye-catching performance being from mobile payments.

According to the Chinese Financial Certification Association, in the major 35 cities of China only 3% of electronic (Internet and mobile) banking clients use Near Field Communication technology as a payment method. With all the convenience of the NFC technology it seems strange that the trend didn’t pick up yet.

The latest financials from Tencent Group shows that overall growth stayed strong in the first quarter of 2014 as revenue hit RMB 18.4 billion, 78% of which were value-added services. E-commerce however suffered as revenues declined 24% as compared to Q4 2013. Tencent indicated that the lagging performance was a seasonal factor; in addition Tencent has recently re-focused its e-commerce strategy.  

As known, Tencent setup a partnership with Jingdong this year, acquiring 15% of the online retailer which also holds QQ wanggou and Paipai. The acquisiton is an indication that Tencent is serious about e-commerce, but they still seem to be searching for the right business model. Yet with Alibaba listing soon, Tencent will have to show rapid returns on their investment in order to keep a increasingly impatient set of investors happy. Tencent's e-commerce challenges must now be confronted to stay ahead of the game.

 

20140515 TencentQ1Financials

After the PBOC’s suspension of QR code payments and virtual credit cards, they have begun soliciting comment on draft guidelines on “Payment Institutions Network Payment Business Management Approach” (provisional).

After what seems like forever, on February 18th, the regulators gave us a milestone reform for cross-border trade.

 

Over the past weekend, Alipay announced that it processed about US$150 billion in mobile payments in 2013 which is potentially more than PayPal and Square combined. PayPal cleared US$27 billion in 2013 and Square's number is not public, but likely far less than even PayPal's. 

Mobile Payment Transaction Value

That's a huge number and makes Alipay the largest mobile payments platform in the world. It wasn't really a question of if it would happen, but when. With over 300 million users and 100 million mobile users, Alipay's mobile payment growth has tremendous market scale which is part of the reason for the success of their Yu'ebao investment product that just seems to keep growing and growing... 

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