In China, 40% of connected consumers pay by mobile on a weekly basis. Hong Kong ranks second as 32% using it every week, followed by South Korea at 31%.
According to Connected Life, the latest study of over 70,000 consumers from global insights consultancy Kantar TNS, China is the number one mobile payment market globally, with 40% of connected consumers paying by mobile on a weekly basis, and 77% having used mobile payment in the past.
This number rises among younger Chinese ages 16-35, where half (50%) of them use mobile payment weekly, but is highest (52%) amongst younger adult consumers in the 25-34 age group. Nearly 60% of the elder (45-65 y/o) have tried this kind of new technology in past, and 22% of them are engaged weekly.
Connected Life is a leading global study of the digital attitudes and behaviours of 70,000 Internet users across 57 countries. It uses comprehensive analysis of how connectivity changes people’s behaviour to address the big challenges for marketers. It does so by looking in detail at consumers, connections, content and commerce. The fieldwork was undertaken in all markets between June and September 2016. In China, we have interviewed 2,480 consumers across 22 tier 1-5 cities.
From a regional perspective, Asia Pacific is leading the world in mobile payment with over half (53%) of connected consumers using their mobiles to pay for goods or services at point of sale via apps, in comparison to 33% in North America and 35% in Europe.
Rising mobile penetration is a clear driver, with the number of smartphone users across Asia Pacific now numbering over a billion, according to eMarketer report. In addition, the evolution of Asian chat apps to include payment options and the lack of legacy banking structures in the region have accelerated the uptake of the behaviour amongst consumers.
In recent years, popular chat apps such as WeChat and LINE have developed numerous payment services such as WeChat Pay, Line Pay, and even including Alipay, facilitating everything from taxi bookings to e-commerce sales. Mobile payment options within these apps allow consumers to complete their purchase journey seamlessly, and have helped to establish these behaviours.
Aurelia Leopold, Director, Finance & Banking at Kantar TNS says: “The rapid uptake of mobile payments has been facilitated by a new breed of disruptors - digital businesses such as WeChat who are now competing with traditional banks in the fintech arena. They are able to do so because they have an existing user base, giving them the audience and the insight to effectively provide people with the financial services they want and need.
“They are also not tied down by cumbersome legacy structures or regulatory issues, allowing them to be more nimble,” she said. “As mobile payments become the norm across Asia Pacific, traditional financial services companies need to find ways to embed their services within the ecosystem of the Asian consumer, or run the risk of becoming obsolete.”
Majority of mobile payment in China is skewed to the small amount. The most popular locations where the mobile payment is made include restaurants, convenient stores, taxi/sharing cars. Younger customers use WeChat payment more while Alipay more popular among older customers.
The good news for brands is that the uptake of mobile payment across the region is likely to help facilitate the growth of e-commerce. However, the numbers suggest that e-commerce makes up a very small proportion of total sales across Asia Pacific, and still has a way to go before it reaches its potential. Trust is a key barrier. In China, consumers’ worry over security also includes the concern of losing a phone and exposing the personal financial information while transacting through online. Besides security, customers also worry that the payment cannot be made when the Internet connection is lost.
Aurelia continues: “There are clear patterns of adoption before a market begins to fully embrace e-commerce. Access is the first, with the lack of infrastructure and payment mechanisms preventing e-commerce from taking off. After this comes trust – consumers need to be confident in the payments they are making and the companies facilitating the transactions. That’s why it’s positive to see Asia Pacific leading the world in terms of mobile payments.”
She said: “But companies need to be doing more to improve ease of access and trust in the payment systems. As access and trust increase we will no doubt see e-commerce increase.”