Alternative payment methods such as mobile and digital wallets dominate the e-commerce space in China. They have displaced cash and cards and are the most preferred payment method with 67.3% market share in 2023, finds GlobalData, a leading data and analytics company.
GlobalData’s E-Commerce Analytics reveals that Chinese e-commerce market is expected to register a 11.9% growth in 2024 to reach CNY17 trillion ($2.4 trillion), as consumers increasingly shift from offline to online purchases. The market is set to increase at a compound annual growth rate (CAGR) of 10.9% between 2024 and 2028 to reach CNY25.7 trillion ($3.6 trillion) in 2028.
Poornima Chinta, Senior Banking and Payments Analyst at GlobalData, comments: “Chinese e-commerce market, the largest in the world, experienced sustained growth over the past few years driven by rising internet and smartphone penetration, availability of secure online payment systems, and increasing number of online shoppers.”
To boost e-commerce sales, the government is also taking various initiatives. In August 2023, nine Chinese government departments, including the Chinese Ministry of Commerce (MOFCOM), introduced a three-year plan to develop and promote e-commerce even in rural areas. The plan includes several aspects such as improving internet and payment infrastructure as well as developing required logistic facilities.
Coming to payment tool preference, alternative payment solutions dominate e-commerce in China with a combined market share of 67.3% in 2023, according to the GlobalData’s 2023 Financial Services Consumer Survey*. This is a trend that is prevalent in many Asian markets.
Alipay and WeChat Pay, with more than one billion worldwide users each, are the most popular alternative payment methods, which have gained prominence due to their simplicity, speed, and convenience. International brands such as Samsung Pay and Apple Pay are also available in the market.
Alternative payments are followed by bank transfers and payment cards. Cards account for a 14.9% share of e-commerce transaction value in 2023. Credit cards are more preferred than debit cards due to the value-added benefits they offer including interest free instalment payment options, reward programs, cashback, and discounts.
Chinta concludes: “The Chinese e-commerce market is expected to continue its upward growth trajectory supported by the government initiatives and growing consumer preference for online shopping. Alternative payment solutions are likely to continue their dominance driven by their growing userbase and increasing online merchant acceptance”.
