Although it may be hard to comprehend for outsiders, for anyone who has been to china in recent years it is no surprised that the use of cash within China has seemly halted. Making it easier and more convenient for locals but more challenging for tourist, who don’t have Chinese credit cards and can’t use WeChat Pay or Alipay. The decline of cash surprisingly has nothing to do with the use of debt or cash or any economic distress. The decline in the use of paper money or coins can attributed to the rise of mobile payments.
In fact, it can be attributed to the growth of two super apps WeChat and Alipay that has completely changed the purchasing behavior and the everyday life in China. Collectively between both Alipay and WeChat user traffic reaches nearly every person in China. With such an expansive user traffic, these super apps have made having cash or coins seem like an inconvenience, rather than a necessity. Although, China may be on the extreme end, globally the use of paper cash and coins are declining. While the use of credit cards and digital wallets platforms are increasing.
How Mobile Payments Grew In China
The spike of mobile payments in China became apparent back in 2016; when it hit $5.5 trillion USD. Significantly larger than the United States’ $112 billion in revenue from mobile payments. The use of these super apps made life in China more convenient. With a simple scan of a QR or barcode allows you pay for so many things. You can you pay for your food, haul a taxi or even pay rent with WeChat or Alipay. On top of being able to chat and keep up with friends, pay for a train ticket to visit your family or schedule a doctor’s appointment, all without leaving the WeChat app. These super apps have forever changed Chinese culture and have become a part of everyday a part of life. Even the busker in China leave their QR codes on boards for tips.
Apart from its rapidly growing popularity within China and rising to become two of the most influential apps in China. WeChat and Alipay have become so popular they are said to have surpassed major credit companies like Visa and Mastercard in total global transactions per day. Although, some other European countries have dramatically decreased their use of paper cash and coins, they have still heavily relied on credits not mobile payment services.
Mobile payment apps like Alipay and WeChat pay will continue to rise, as they offer a cheaper alternative to credit cards who have fees can quickly add up. Mobile payments system is often easier to set up. Simply, requiring companies download these services and print out an unique QR code, barcode and the use of a working smartphone. Not having to buy expensive equipment like card readers eliminates all the fees attached to them. Ultimately helping keep cost down and creating more capital so businesses can grow and thrive.
Will Mobile Payment Services Take Over The World?
As WeChat and Alipay continue to expand within the Asia, WeChat is also seeking to expand outside of Asia. With a long-term goal of having a store pool of users from the United States, as many Chinese nationals travel and live within the country. It remains unknown on rather or not these apps will be able to gain traffic from native users or just Chinese tourist.
Just like China many of the European countries and the US have decreased its’ use of paper cash and coins. Instead many of these European countries have ditched cash and instead heavily rely on credit card as their preferred way of transactions. Only time will tell, for these super apps. China in fact could be leading the pact on mobile payments or such users of mobile payments could be limited to China. Both Alipay and WeChat have the potential to change how digital wallets are viewed globally.