Few trusted the mechanism, and if you wanted to unwind a transaction, it was necessary to get the other party’s consent. The electronic payment system was wholly unsuitable for e-commerce and just as inflexible as the traditional system. There were alternatives, but interbank transfer payments required the completion of a stack of forms and incurred a 1% to 2% fee, while withdrawals at ATMs were limited to between $200 and $300. “When I got in 2004, the easiest way to pay my rent was by withdrawing cash from the teller, putting it in a paper bag and crossing the street to physically deposit it,” says Kapron.
The banking system was old fashioned and inflexible, but from the very beginning, most of his payments were “mobile”. He was working in China from early in the century and experienced the development of cashless payments. Zennon Kapron is a banking industry veteran and founder of Shanghai based financial services research firm, Kapronasia. More than 900 million of these are based in China.Ĭhina used to be a cash-based society, with a very underdeveloped banking system. WeChat Pay has more than 900 million monthly users, while Alipay has more than 1.2 billion as of April 2020. Apple has more users than both the platforms run by competitors Google and Samsung combined, which were estimated to have around 100 million users each in 2020. Apple Pay is the largest mobile digital payment platform outside China, with 227 million global users, as of July 2020. There are two key players – Tencent’s WeChat Pay and Alibaba’s Alipay – and they are huge. If you are conducting business or making purchases in China, you need to have an account with an online or mobile based third party payment system. The Chinese economy is fast developing into a cashless society. Out of necessity, there was a huge rise in contactless payments across the world and Asian markets, experienced a 20% increase in digital users in the three months to the end of 2020.Ī report by McKinsey report identifies five key themes shaping the Asian payments landscape, but the benefits to e-commerce – and in particular insurance – have been most keenly felt in China. And while COVID-19 greatly reduced discretionary spending, it was the catalyst for other trends within the payments landscape. The rapid growth of digitally connected consumers in the region is the driving force behind the burgeoning e-commerce sector. They are the glue that binds relationships between businesses and consumers, providing opportunities for ongoing engagement, and brand presentation. We tend to take them for granted these days, but digital payments are an essential part of commerce for Asia. It is now so important to the region’s aggregate banking revenues it has grown from 33% in 2007 to 44% today. That’s nearly half the global total, according to McKinsey’s Global Payments Map. In 2019, it generated more than $900 billion. Today, more than 92% of China’s digital transactions are shared between WeChat Pay and Alipay.Īs a region, Asia is by far the biggest contributor to global payments revenue.Mobile payments have catalysed the distribution of life and health insurance and begun to demonstrate an ability to perform market segmentation to allow better targeting of products.This year, China’s $2.8 trillion retail ecommerce market, is set to become the first in history to transact more than half of its retail sales online.As a result of COVID-19 there was a huge rise in contactless payments across the world and Asian markets experienced a 20% increase in digital users in the three months to the end of 2020.