China’s Retail Payments Market

Mobile Payments and a Developing Payments Ecosystem
by Hua Zhang, May 14, 2014
Industry Trends
Asia-Pacific

Abstract

Celent estimates that China’s e-commerce market will reach US$550 billion in 2015, and by 2020, China's e-commerce will account for 50% of the total turnover of the retail industry. At that time, third party online payments and mobile payments will exceed credit card and cash payments.

Today, the retail payments industry is no longer just about monetary transfers. It requires the establishment of an ecosystem which includes e-malls, social networks, money market funds, industry-segmented payments (movie ticket payments and restaurant payments are very different), mobile payments, credit, map services, and O2O (online-to-offline) partner management.

In the report China’s Retail Payments Market: Mobile Payments and a Developing Payments Ecosystem, Celent examines the size of the retail payments market, trends, regulations, and the competitive landscape.

“Many of the advantages that commercial banks enjoyed in the past will be lost gradually, but their core advantages will remain,” says Hua Zhang, Analyst with Celent’s Asian Financial Services Group and author of the report. “Nevertheless, if banks do not change with the times, they will be marginalized to merely having deposit accounts, and the very profitable advertising, credit, and financial services businesses will gradually move away from them.”

This report provides an overview of retail payments in China, including discussion of retail payments trends and vendor strategies.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

Executive Summary

1

The Retail Payments Market

3

Trends in Traditional Payments

4

 

Cross-Border Payments

4

 

Products with the EDI Payment Function

5

 

Financial IC Card

5

 

Bottlenecks

7

 

Improvements in Rural Payments

8

Mobile Payments: Contactless Payments Will Replace Credit Cards

9

 

China UnionPay’s Mobile Payment Strategy: The Ubiquitous Swipe Card Reader

10

 

NFC Payment Will Replace QR Code Payment and Sonic Payment

11

 

China’s Third-Generation National ID Card Is an Important Channel

11

Internet Trends

12

 

Erosion of the Credit Card Market

12

 

From Payment Services to Information Services

13

 

SoLoMo + O2O Will Once Again Erode Banks’ Payment Business

14

Laws and Regulations

17

Competitive Landscape

19

 

Alipay: Leader in the Payment Arena

20

 

Tenpay and WeChat Payment: Utilize Social Networking

21

 

China Merchants Bank: Replace Credit Card with Mobile

21

 

Bank of Communications: Launching a Cardless Life Concept

22

 

Hua Xia Bank: From Financial Arena to Non-Financial Arena

22

 

China CITIC Bank: Launch of O2O Payment

22

 

Mobile Operators: From Mobile Payment to Payment Management

23

 

Other Institutions

23

Conclusion

25

Leveraging Celent’s Expertise

27

 

Support for Financial Institutions

27

 

Support for Vendors

27

Related Celent Research

28

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