Alternative payments methods such as mobile and digital wallets are leading the e-commerce sphere in China, collectively accounting for 72 percent of market share in 2022, according to GlobalData.
Alibaba Group’s Alipay is the primary payment tool on all the platforms owned by its parent, as the e-commerce giant leverages its large retail customer base, according to the market research firm.
Another major player is WeChat Pay, offered on WeChat messaging app, offering a full range of shopping and payment services to over one billion users in China.
“The Chinese e-commerce payments landscape is dominated by alternative payment solutions, with Alibaba’s Alipay and Tencent’s WeChat Pay being the most popular among consumers,” said Ravi Sharma, Banking and Payments, Lead Analyst at GlobalData.
International payment solutions such as Apple Pay and PayPal are also available in the country but have a long way to go if they want to compete with established local brands, added GlobalData.
“Alternative payments are the most popular method to pay for online purchases, and their popularity is expected to grow in the coming years as well with Alipay and WeChat Pay continue to hold their duopoly in the market,” said Sharma.
Comparatively, debit, credit, and charge cards’ share in the overall e-commerce transaction value was 14.1 percent in 2022; their usage driven by the reward benefits at partner merchants.
Cash has seen constant drop in market share for online purchases, due to growing preference for electronic payments.
China’s e-commerce market has evolved rapidly over the last ten years, supported by rising internet and smartphone penetration, increasing consumer confidence in online shopping, the emergence of e-commerce platforms and availability of alternative payment tools.
Most recently, the Covid-19 pandemic has further accelerated e-commerce activities in the country, with an increasing number of consumers switching to online channels to avoid making physical contact with cash and POS machines.
Looking ahead, China’s e-commerce market is expected to register 10.5 percent growth to reach CNY 14.5 trillion (USD 2.3 trillion) in 2022. It is set to increase at a compound annual growth rate (CAGR) of 8.7 percent between 2022 and 2026 to reach to CNY 20.2 trillion (USD 3.2 trillion) in 2026.