Over 30 percent of Chinese internet users believe that China will completely transform into to a cashless society in the next 10 years, according to a report released by the market research firm YouGov earlier this month.
There is little doubt that China is currently leading the world in the mobile payment market. In today’s urban areas, the majority of Chinese consumers own smartphones, which allow them to use mobile payment apps to pay for just about everything.
The survey shows that the adoption rate of mobile payment solutions has caught up quickly to stand at 73 percent this year. This change happened at a startling rate, since major payment service providers like Alipay, WeChat Pay and Union Pay only entered the field around three years ago.
In China, the explosive development of the mobile payment sector goes hand in hand with the rapid rise of the country’s e-commerce industry. Chinese consumers embrace online shopping activities for the speed and convenience that they offer. It, thus, has provided a fertile ground for industry leaders such as Alibaba and Tencent to educate them about the ease and rapidness that mobile payment apps offer.
As a result, even though 86 percent of online users indicated in the YouGov study that they still view cash as the top payment option when purchasing offline, it is not hard to foresee a cashless society in China as the e-commerce sector continues to evolve in a highly competitive commercial environment spurred by a number of leading players.
The same study also finds that Alipay is the dominant mobile payment app used by Chinese consumers, with an adoption rate of 83 percent. It is then followed by Tencent’s WeChat Pay (25 percent) and UnionPay (20 percent).
However, the development of mobile payment faces some challenges as well. Chinese consumers are not fully ready to become cashless partly due to security concerns, the YouGov report points out. 62 percent of respondents signaled their worry that using mobile and cashless payments might raise the possibility of falling prey to fraud and theft.
In a recent experiment, Alibaba tested a cashless supermarket in Beijing, giving customers no other option but to pay for their fruits and vegetables with Alipay. Chinese consumers had varying responses to this trial. According to a report by domestic media EEO.com, consumers questioned the legality of a store in declining cash payment.
“Merchants who declined to accept Chinese currency RMB violated the law,” one central bank official reportedly said, “and banks and payment institutions are similarly in breach of the same law if they guided merchants to do so.”
YouGov concluded the report with some suggestions on how to promote the concept of “cashless” to those cash-dependent Chinese. For example, it advises payment firms and banks to work with brands deemed trustworthy by consumers to encourage them to adopt cashless payments.