Long before the pandemic was even a thing, people globally were already becoming increasingly digitized through increased dependency on the internet and the adoption of smartphones and mobile devices. However, the pandemic has only further stimulated this. One of the major technological byproducts from this pandemic has been the increased adoption of FinTech and mobile payment systems. In fact, according to KPMG’s International Global FinTech Survey, “The Top 3 Greatest Sources of Banking Disruption,” FinTech ranked number 1- and it wasn’t close.
Developed economies around the world began implementing a cashless payment system with credit cards decades ago. However, in recent years, emerging markets have embraced newer and more cutting payment solutions through FinTech and mobile payments. Much of the population living in emerging economies such China, for example, have been underbanked until the rise of these mobile payment innovations.
The pandemic has only buoyed the growth and adoption of mobile payments further. There has never been demand like this for contactless payments and electronic payment systems due to social distancing. Furthermore, these types of transactions have almost single handedly kept retailers afloat and our world functioning.
With 5.2 billion mobile users in the world forecasted to grow to 5.8 billion in 5 years, it’s no wonder why the mobile payments industry is ballooning and everyone is increasingly adopting FinTech.
Keep this in mind as well. The mobile payments industry was already growing before the pandemic’s surge began. But now, the mobile payments industry is forecasted to balloon to $12.06 trillion by 2027 with a CAGR of 31.2%.
The western world is increasingly adopting mobile payments systems. However, while countries like America spent the past decade upgrading its bank-based magnetic striped cards with chips, China built a revolutionary payment system that the western world is still significantly lagging behind.
What did China do? Completely leapfrog the card-based system through digital wallets and QR codes. When it comes to FinTech adoption and mobile payments, China is leading the world- by a wide margin. Even Ernst and Young says so judging by their 87% score for China on their 2019 fintech adoption index. This dwarfs the global average of 64%.
While many countries still struggled to promote mobile payments in response to the pandemic, China was already leading the rest of the world in building up a cashless society in both user numbers and penetration rates. The numbers do not lie and are astounding.
As of June 2020, over 765 million people in China completed at least one mobile transaction annually, with 802 million total mobile payment users in the entire country. To put that in perspective, that is over half of the country’s entire population.
37.1% of these users also make at least one mobile payment daily.
Still not sold on how rapid this growth is? Only 125.48 million Chinese were mobile payment users in 2013.
Compared to the rest of the world, China also dwarfs everyone else in cumulated transaction value through all digital payments.