Low credit card usage, the growing popularity of e-Commerce and an expanding middle class have accelerated the growth of mobile payments in China.
Frost & Sullivan has forecast that mobile payments services in China will grow at a compound annual growth rate (CAGR) of 21.8% from 2017 to 2023, growing three-fold from $29.93 trillion to $96.73 trillion.
e-commerce, travel and overseas education are also fueling an increase in cross-border payment transactions. Frost & Sullivan says nearly 65% of Chinese tourists have used mobile payments abroad, approximately six times higher than the average non-Chinese traveler.
“In China, e-Commerce is a powerful incentive for users to purchase smartphones that enable mobile payment features. The social aspect that mobile payments bring can serve as an integral step in building trust and learning about digital services, especially in rural communities,” said Mei Lee Quah, industry principal analyst, for digital transformation at Frost & Sullivan's ICT practice.
The total number of active mobile payment customers is expected to reach 956 million by 2023 from 562 million in 2017 which will attract additional investments from mobile payments market participants. To date, there are 250 licensed payment service providers in the country.
Frost also identified rural region and the elderly as new market opportunities. The analyst says China will continue to be a major player in the global mobile payment services market and service providers in the country will continue to focus on improving and enhancing security on mobile payment platforms.