China’s Cashless Kingdom

Anyone who spends a day in China will notice that Chinese don’t carry cash around. But instead of using credit cards, WeChat Wallet and Alipay are two default payments. Chinese has jumped the credit card phase and directly landed in the next step–mobile payment. For China, the concept of credit card never gets as popular as in developed countries.

The Online Payment Numbers

Tencent (the creator of WeChat and QQ, two of the most important social media platforms in China), published a joint report with other two institutes detailing the penetration of mobile payment in the country.

More than 6,500 people were asked about their payments for a range of foods and services, including take away food, restaurant dining, telecommunications, and transport. About half of them used cash for about 20 percent of their monthly spending, and four in 10 carried less than 100 yuan (US$14.84) in cash when they left the house. About seven in 10 respondents said they could go for more than a week with just 100 yuan in cash, and 84 percent were comfortable going out with just their mobile phone to pay everything.

Launched in March 2014, WeChat Wallet gained wide publicity thanks to the Chinese New Year of 2015, when people sent virtual hongbao (red envelope) to friends, relatives and in WeChat groups to celebrate a new year. WeChat Wallet allows just about anyone with a bank account and a smartphone to make electronic payments.

On the way to her metro station, she grabs two baozi (steamed buns), paying 4 yuan (US$ 0.6) by scanning the QR code of the vendor’s WeChat. It takes less than five seconds.

Data from research institution iResearch shows that the value of China’s mobile payments market tripled to more than RMB 38.5 trillion (US$5.6 trillion) in 2016 and is predicted to reach RMB 55 trillion in 2017.

Enough for the numbers, let’s have a look at an ordinary white-collar worker’s one day of life.

A Real Example of Mobile Payment

Chen Peixiao lives in Dongguan, a southern manufacturing city between Guangzhou and Shenzhen. About 8 o’clock in the morning, she leaves her house in Shilong–a northern town in Dongguan–for work. On the way to her metro station, she grabs two baozi (steamed buns), paying 4 yuan (US$ 0.6) by scanning the QR code of the vendor’s WeChat. It takes less than five seconds.

At the metro, she passed through the gate swiping the Dongguan Tong card, which can be charged with WeChat. When the train arrives in Dongcheng the city center, she hops on a shared bike (paid in WeChat), off to her office in five minutes.

For lunch, she chooses her favorite restaurant, a local steamed food shop. She orders delivery via mobile app and pays with Alipay.

Around 4 o’clock, she decides to relax tonight and watch a movie with her friend. So, she opens her WeChat again and selects the latest Hollywood blockbuster. From choosing a movie, selecting a time, picking a seat to purchase tickets, it’s all done in WeChat.

Before the movie starts, she and her friend dine in a fancy restaurant near the cinema and of course, pay by WeChat. Finishing the movie, she takes a DiDi home, China’s most popular car-hailing app and pays via Alipay.

She can go like this without cash for days. In Dongguan, and many other cities, commodities and services rarely require cash. Even tips in a restaurant offer two ways of payment. One is a normal jar with small changes inside, the other one is two QR code (one for WeChat one for Alipay) printed on a paper, allowing people to pay the tips via smart phone. The young people enjoy this way of life. Instead of taking a wallet, a phone and a power band are all they need.

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