The U.S. and Europe often look to China as an example of what a mobile or social payments ecosystem could look like at scale. Consumers and businesses alike online and in-person prefer using WeChat Pay, the mobile payments function of the popular messaging app, or the PayPal-like Alipay to cash -- because it's so easy. People like their payments done easily and quickly with money passing directly from the customer to the merchant or the other way around. That's what WeChat and Alipay, the dominant forces in mobile payments, offer -- and not just at Starbucks; people use mobile payments to pay bills, for transportation, movie tickets, even karaoke. Now, the Chinese central bank is stepping in so it can monitor payments, without asking permission from the processors, to keep an eye out for money laundering and other illicit transactions. Key updates
- The People’s Bank of China has mandated online payment companies connect to a centralized clearing house by Oct. 15 and route all payments through it by June 30. Whether or not this makes payments as slow in China as they are in the U.S. remains to be seen.
- The mandate by China’s central bank could force Ant Financial and Tencent, the parent companies of Alipay and WeChat, respectively, to begin sharing user transaction data with competing companies.
- Social payments are set to increase China’s GDP by $236 billion by 2025
- Mobile payments account for 12 percent of all payments in China (card payments account for 41 percent; cash payments, 30 percent; and online payments, 16 percent)
- Alipay users sent $1.7 trillion last year compared to only $70 billion in 2012; WeChat users sent $1.2 trillion in the same year compared to $11.6 billion in 2012
- In 2014, Alipay held 82.3 percent of the Chinese market for digital payments and WeChat Pay controlled 10.6 percent; by 2016, Alipay’s market share fell to 68.4 percent and WeChat Pay’s market share rose to 20.6 percent