Recently Nihon Keizai Shimbun Electronic Edition reported the following:
ネット・IT 中国・台湾 アジアBiz
2019/9/15 23:00日本経済新聞 電子版
[Shanghai = Zhang Yuxiang] Smartphone payments led by Alibaba Group, Tencent, were completely replacing cash. Usage ranged from payments at actual stores to various services that could be received on smartphones, and even including medical care; its convenience had far exceeded cash. According to a questionnaire conducted by the Nihon Keizai Shimbun in August, 47% or nearing half of the respondents said that the number of times they used smartphone for payments was more than 90 in the past month.
“In the past month, I have used my cash only once. My smartphone battery ran out.” Henan University instructor Zhao Yuanzhang (29) said that all payments were made with the smartphone, except for the 100 yuan (about 1500 yen) paid for refueling his car. Such an example was more natural in urban areas.
When Nihon Keizai Shimbun surveyed more than 50 people through SNS (exchange site), nearly 90% of respondents said that the number of times they used cash within the past month was "less than 5 times". On the other hand, only 3% of respondents answered that smartphone payments were "under 30 times a month". Although most respondents lived in urban areas, and the young people in their 30s accounted for more than 80%, it seemed that there was still remained a “overlapping” before smartphone payments could become more established.
Alibaba and Tencent together had 1 billion users. Although it could not be compared simply to include overseas users, the working-age population in China had exceeded the 900 million. Excluding children and the elderly, the majority of Chinese used smartphone to make payments.
There were several reasons why smartphone payments had spread so rapidly in China. Until just 5-10 years ago, there was a certain amount of fake bills and the reliability of cash was unsatisfactory. If you used smartphone payment, problems such as “paid, not paid” would be dramatically reduced in online shopping. The reason was that it was simple, and the cost was much lower than existing payment methods.
In the case of Zhīfùbǎo (Alipay) handled by Alibaba, there was no fee for remittance or for the settlement between individuals. It was far below of what was generally accepted at a 0.6% for corporations, and at 2-5% for credit cards. Any cash lost and fees for transport that came along were added to the expense. The fact that the balance between cost and reliability exceeded that of existing payment methods had solidified Alipay position as a de facto.
The questionnaire also asked the purpose of the largest smartphone payment in the past month. There were continuous sayings on payments such as car down payments (60,000 yuan = about 900,000 yen), necklaces (60,000 yuan), rent (10,000 yuan), and computers (9800 yuan). There were only two cases of payment exceeding 10,000 yuan in cash, and cases of tens to hundreds of yuan such as parking fees and transportation costs were conspicuous.
In Japan, it could be seen that for small amount there was the transportation IC, and for huge amount credit cards were used separately. In China, smartphones handled almost all payments. Because there was an underdeveloped payment method, such as the slow spreading of credit cards, it brought about a rapid development, the so-called leapfrog (frog jumping).
Smartphone payments were also creating new jobs.
“My monthly income ranges from 6,000 yuan (about 90,000 yen) to 7,000 yuan. There are no such good jobs in my hometown of Anhui.” It had been one year since Mr. Kang Xiaohui (28) became a delivery person for Alibaba's " Èle me (Are you hungry)” delivery service.
He delivered 30 items to the Shanghai office streets district in one single day. During the meal time gap he quickly swallowed down the noodles, the dish rice that costed up to 15 yuan. Although living in a shabby small apartment that had been further cut into small units, his cash income had increased.
New businesses that based on using smartphone for payments were continued to be created, such as those that employed drivers for home delivery and for the dispatch service etc., and also the subscription (flat-rate) service that could use smartphones to choose rental clothing.
It seems that city people in China is ahead of those in Hong Kong, Canada and Japan in embracing electronic payment in their daily life. I am interested to know the reasons for that.