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Payment Preferences - China - September 2016

“Chinese consumers are enjoying the benefits of mobile third-party payments way before the Western world. It is a joint result of the government support on payment development, the down-to-earth promotions of payment organisations and the open attitudes of consumers. The leading companies are exploring closer partnerships with banking institutions, domestic and overseas merchants, and foreign counterparts. In the future, the payment methods are expected to represent the users’ lifestyles and personalities.”
– Aaron Guo, Senior Analyst, China

This report answers the following key questions:

  • How far is China from a cashless society?
  • What is so fascinating about mobile payment?
  • Where are the opportunities for payment service providers?

This Report focuses on how banks and third-party payment organisations can better market their products (eg bank cards, pay-by-credit services and all-in-one mobile payment apps) through analysing the online/offline payment behaviours of consumers and their attitudes towards different payment methods. This Report also looks into how these non-cash payments, including mobile NFC (Near-Field Communication) payment, are competing in the market, and how innovative plays can help them gain more market share.

This Report covers the following payment methods:

  • Cash
  • Cards – including debit cards and credit cards, with or without chips
  • Online payments – via a third-party payment tool (eg Alipay) using a PC or laptop
  • Mobile payments – via a third-party payment tool (eg Alipay) using a smartphone or tablet
  • NFC payments – using Apple Pay or Samsung Pay
  • Prepaid cards.

This Report estimates the market size of third-party payment organisations (including inter-account transactions), discusses the competitive strategies and innovative plays of key companies (eg Alipay, Apple Pay) and analyses the consumer perceptions and usage behaviours of non-cash payment methods.

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Table of contents

  1. Overview

    • What you need to know
      • Covered in this Report
      • Executive Summary

          • The market
            • Figure 1: Market value of third-party payments, 2011-21
          • Companies and brands
            • Figure 2: Market share of third-party mobile payments, by payment value, 2015
            • Figure 3: Market share of third-party online payments, by payment value, 2015
          • The consumer
            • Figure 4: Type of payment methods used, May 2016
            • Figure 5: Mobile payment occasions, May 2016
            • Figure 6: Reasons for using mobile payment, May 2016
            • Figure 7: Key drivers of overall satisfaction with credit cards, May 2016
            • Figure 8: Most often used non-cash payment methods, May 2016
            • Figure 9: Selected mobile payment methods used, by consumer classification, May 2016
          • What we think
          • Issues and Insights

            • How far is China from a cashless society?
              • The facts
                • The implications
                  • What is so fascinating about mobile payment?
                    • The facts
                      • The implications
                        • Where are the opportunities for payment service providers?
                          • The facts
                            • The implications
                            • The Market – What You Need to Know

                              • Rapid-growing third-party payment market
                                • New regulations introduced to the market
                                  • New opportunity emerges on the market
                                  • Market Size and Forecast

                                    • Third-party payment market to reach RMB 225 trillion in 2021
                                      • Figure 10: Market value of third-party payments, 2011-21
                                    • Third-party mobile payment is gaining ground
                                      • Figure 11: Payment volume and value of banking institutions and third-party payment organisations, 2015
                                    • Slowing down growth of bank card market
                                    • Market Drivers

                                      • Subsidies for consumers using third-party payment
                                        • Lower fees on merchants
                                          • Updated third-party payment regulation
                                            • QR-code-scan payment back to operation
                                              • The introduction of pay-by-credit service by third-party organisations
                                              • Key Players – What You Need to Know

                                                • Alipay leads in mobile payment market but Tenpay is slicing share
                                                  • Differentiated competition strategies of market players
                                                    • Beyond payment methods
                                                    • Market Share

                                                      • Alipay is losing market share to Tenpay on mobile payment
                                                        • Figure 12: Market share of third-party mobile payments, by payment value, 2014 and 2015
                                                      • Stabilised competition in third-party online payment market
                                                        • Figure 13: Market share of third-party online payments, by payment value, 2014 and 2015
                                                    • Competitive Strategies

                                                      • Alipay
                                                        • Tencent
                                                          • China UnionPay
                                                            • 99Bill
                                                              • Specialised in specific industries
                                                              • Who’s Innovating?

                                                                • Apple Pay
                                                                  • Pay Watch by Alipay
                                                                    • From Google Wallet to Android Pay…
                                                                      • …to Google Hands Free?
                                                                        • The future Alipay sees
                                                                        • The Consumer – What You Need to Know

                                                                          • Mobile payments’ usage rate exceeds credit cards’
                                                                            • Subsidies are driving the usage but convenience is the real killer point
                                                                              • Under-engaged affluent consumers
                                                                              • Payment Methods Used

                                                                                • Mobile payment exceeding cards
                                                                                    • Figure 14: Type of payment methods used, May 2016
                                                                                  • Young adults are fans of new payment technologies
                                                                                    • Figure 15: Type of payment methods used, by age, May 2016
                                                                                  • Better-educated consumers tend to use more payment methods
                                                                                    • Figure 16: Number of payment methods used, by educational level, May 2016
                                                                                • Mobile Payment Usage Occasions

                                                                                  • Merchants’ support is necessary for using mobile payment methods
                                                                                    • Figure 17: Mobile payment occasions, May 2016
                                                                                  • The push of third-party payment organisations is driving usage
                                                                                    • Different battlefields for mobile app payment and mobile NFC payment
                                                                                      • Figure 18: Top five usage occasions for mobile app payment and mobile NFC payment, May 2016
                                                                                  • Reasons for Using Mobile Payment

                                                                                    • Convenience is key, discount is driver
                                                                                        • Figure 19: Reasons for using mobile payment, May 2016
                                                                                      • Spontaneously, rather than prompted
                                                                                        • Thirtysomethings and men find mobile payment fashionable
                                                                                          • Safety issue is not stopping young adults from using mobile payment
                                                                                            • Figure 20: Selected reason for using mobile payment, by age, May 2016
                                                                                        • Non-Cash Payment Preferences

                                                                                          • Alipay rules the market
                                                                                            • Figure 21: Most often used non-cash payment methods, May 2016
                                                                                          • Affluent consumers stay loyal to credit cards
                                                                                            • Potential to grow internet pay-by-credit services among young adults
                                                                                              • High-end consumption occasions are white spaces for wallet products
                                                                                              • Satisfaction with Non-Cash Payments

                                                                                                • Satisfaction largely aligns with usage rates
                                                                                                  • Figure 22: Satisfaction with non-cash payment methods, May 2016
                                                                                                • Speed is good, but wider merchant supports are needed
                                                                                                  • Figure 23: Overall satisfaction with main non-cash payment methods, by payment methods, April 2016
                                                                                              • Key Drivers of Satisfaction with Non-Cash Payments

                                                                                                • High credit limit and easy to use are advantages of credit cards
                                                                                                  • Figure 24: Key drivers of overall satisfaction with credit cards, May 2016
                                                                                                • JD IOU’s perception is close to credit card, while Huabei stands out
                                                                                                  • Figure 25: Key drivers of overall satisfaction with JD IOU, May 2016
                                                                                                  • Figure 26: Key drivers of overall satisfaction with Huabei, May 2016
                                                                                                • Alipay excelling in almost every aspect
                                                                                                  • Figure 27: Key drivers of overall satisfaction with Alipay, May 2016
                                                                                                • WeChat Wallet as a valuable complement of WeChat
                                                                                                    • Figure 28: Key drivers of overall satisfaction with WeChat Wallet, May 2016
                                                                                                  • China UnionPay Wallet to highlight supportive merchants
                                                                                                    • Figure 29: Key drivers of overall satisfaction with China UnionPay Wallet, May 2016
                                                                                                • Meet the Mintropolitans

                                                                                                  • Mintropolitans triple the usage of mobile NFC payment
                                                                                                    • Figure 30: Selected mobile payment methods used, by consumer classification, May 2016
                                                                                                  • More MinTs choose credit cards as first payment choice than non-MinTs
                                                                                                    • Figure 31: Selected most often used non-cash payment methods, May 2016
                                                                                                  • MinTs are paying more attention to safety
                                                                                                  • Appendix – Market Size and Forecast

                                                                                                      • Figure 32: Market value of third-party payments, 2011-21
                                                                                                  • Appendix – Market Segmentation

                                                                                                      • Figure 33: Market value of online third-party payments, 2011-21
                                                                                                      • Figure 34: Market value of mobile third-party payments, 2011-21
                                                                                                  • Appendix – Methodology and Abbreviations

                                                                                                    • Methodology
                                                                                                      • Key driver analysis methodology
                                                                                                          • Figure 35: Satisfaction with different aspects of main non-cash payment methods, April 2016
                                                                                                        • Fan chart forecast
                                                                                                          • Abbreviations

                                                                                                          Companies Covered

                                                                                                          To learn more about the companies covered in this report please contact us.

                                                                                                          Payment Preferences - China - September 2016

                                                                                                          £3,195.84 (Excl.Tax)