While it took Alipay five years to reach 100 million customers prior to 2008, it added 20 million new users in the first two months of 2009. In 2008, Alipay officially introduced its mobile e-wallet and launched Alipay’s meteoric growth. To resolve that issue and drive greater volumes on its platform, in 2003 the company introduced Alipay-an online digital payments solution based on escrow, where Alibaba held the money until the buyer signed off on receiving the goods. One of the challenges it faced in this early e-commerce market was the lack of trust in online transactions between strangers. In many regards, this success is thanks to two Chinese tech juggernauts whose brands now reverberate around the world: the e-commerce giant Alibaba and the gaming company Tencent, with its social media platform WeChat.Īlibaba started in 1999 as a business-to-business e-commerce platform that required users to pay via their bank accounts. Photo: Sudipto Das, 2015 CGAP Photo Contest Ma Qin, 65, sells handicrafts in the city of Dali, China. This is all the more remarkable because just two decades ago, China was basically a cash economy. Digital payments are becoming so dominant that the People’s Bank of China has had to forbid what it sees as discrimination against cash by merchants who accept only digital payments. The number of people making mobile merchant payments is expected rise to 577 million in 2019 and to almost 700 million in 2022. This rapid shift was enabled by the country’s widespread bank account and smartphone ownership, but nevertheless holds clear lessons for providers in less advanced markets.Ĭhina’s estimated 890 million unique mobile payment users made transactions totaling around $17 trillion in 2017-more than double the 2016 figure.The companies see digital payments not as a goal in itself but as an entry point to a vast ecosystem of both offline and online goods and services-and they are using the data generated to transform financial services as well as the physical retail industry.Chinese giants Alibaba and Tencent pioneered digital merchant payments and have driven the shift away from cash in the Chinese economy, where they now account for 90 percent of the $17 trillion mobile payments market.
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