China moves further towards cashless society as payment giants Alipay, WeChat Pay gain ground

Alipay and WeChat Pay have further consolidated their popularity, ranking as the top two preferred payment options among China’s high net worth individuals, according to a survey released on Wednesday.

Alipay, the mobile payment arm off Ant Financial, an affiliate of Alibaba Group Holding, remained as the No 1 preferred payment system among China’s super rich for the second straight year, according to the Hurun Chinese Luxury Consumer Survey 2018.

WeChat Pay, which is controlled by Tencent Holdings, was ranked the second most popular payment option according to the survey, reflecting the swift rise and popularity of mobile payments in the world’s second largest economy.

In a similar poll of wealthy individuals two years ago, bank cards ranked as the most preferred payment system. However, they have since fallen to become the third most popular choice, though they still rank ahead of cash.

The survey polled 463 mainlanders with personal net worth of more than 10 million yuan (US$1.6 million) during a six-month period through December. On average, the respondents were 40 years old and had personal wealth of 62 million yuan.

Included in the survey were 64 super-wealthy individuals worth at least 100 million yuan. About 58 per cent of respondents were from first tier cities of Beijing, Shanghai, and Guangzhou, but the poll was inclusive of more than 20 provinces and municipalities.

Mobile payments have made major inroads as a medium of settlement in Chinese cities. Aside from convenience stores, shopping malls, and fine dinning, mobile payments are even the norm among vegetable markets and other small scale vendors.

“Mobile payment is set to claim more ground in China with the dual giants of Alipay and WeChat Pay further consolidating their lead,” said He Fei, a senior researcher at Bank of Communications in Shanghai.

Efforts by Alibaba and Tencent to expand their payment systems abroad point to an increase in cross-border transactions over time, he said.

“In addition, more smart devices would be available for payments like wristbands and watches in the future,” he said.

China’s mobile payment sector topped 29.5 trillion yuan in the third quarter of 2017, or more than three times the level a year ago, according to consultancy Analysys.

Alipay and WeChat Pay accounted for 93 per cent of China’s mobile payment segment, according to data from Analysys. Among them, Alipay takes the lead with a market share of 54 per cent, according to data through September 2017.

On Saturday, Shanghai’s subway began using quick response, a system allowing commuters to pay their fares via Alipay or China UnionPay.

Meanwhile, millionaires in China are showing more confidence in China’s economic performance, as 46 per cent said they are “very confident” of Chinese economy, up from 28 per cent a year ago.

More than 72 per cent said China will be on economically on par or have overtaken the US in 10 years, up from 65 per cent a year ago.

The poll also found Shanghai, Beijing and New York were viewed as the top three most important cities in the next decade, unchanged from last year’s survey.

Hong Kong ranked seventh, the same as the poll result a year earlier. Accordingly, real estate remained as the most popular investment, followed by equities.

Alibaba is the owner of the South China Morning Post.