the Mobile Payment Giants that Redefine Chinese People’s Life
Rise of the Future Payment System
It all started from the most popular e-commerce site in China — Taobao by Alibaba— a platform which allows various kinds of C2C engagements (either to sell or buy) in both fixed-price sales and auction formats.
When Alibaba was first founded in 1999 as a B2B e-commerce platform, it was aiming for users to shop and then pay via their bank accounts. However, there was a huge lack of trust in online transactions at the early stages. In order to establish more trust and drive more traffic on Taobao, Alibaba introduced Alipay — the online digital payment solution that holds the money until the buyer signs off on receiving the items.
According to Jack Ma, the founder of Alibaba, “When we created Alipay in 2003, we did it to resolve the issue of trust between people. And by resolving the issue of trust, we’ve also resolved the issue of payment.” It is so true, since once the core problem was solved, the business model started to become successful. Furthermore, it was a breakthrough move not only for Taobao and the whole business realm but also a revolutionary progress to the way Chinese people live: this mobile payment system helped Taobao reach 100 million users prior to 2008, added 20 million new users in the first two months of 2009, and today it has more than 700 million unique users.
The Daily Gesture for Chinese People
As the user number keeps expanding exponentially, 92% of people in China’s largest cities have started using either Wechat Pay or Alipay as their main means of payment by 2018. This increase in the use of mobile payments in China is directly linked to the growth of e-commerce, and in this case, it is mainly due to the biggest and most successful digital player — Taobao, and to be more specific, its wide arrange of products as well as its secure and convenient payment system that attract people to consider it as the №1 shopping platform. Therefore, the use of mobile payment has naturally become a habit, which has led to Chinese people to live a whole different and cashless life; according to a study by Ipsos conducted in 2017, 40% of the Chinese population regularly carry less than 100RMB (about $16 USD) of cash when outside, and cash and checks have become a “burden” to the average consumer.
As a result, China has been leading the global mobile payment trend with a market of US$12.77 trillion. Moreover, since mobile payment “has become so dominant, the People’s Bank of China has had to forbid what it sees as discrimination against cash by merchants who accept only digital payments.”
As result, using a super effective mobile payment method, Taobao was able to achieve in a short period what other businesses were kept trying. And due to the trust established through this method, Taobao was able to create and maintain a healthy relationship with costumers that not only has made itself a successful business, but also brought a remarkable change in Chinese people’s life.
