Shanghai -- Mobile payment is flourishing in China.
It is not limited to online shopping either. People are using their smartphones or other mobile devices to do everything from paying taxi fares to exchanging money with friends. The number of people using such mobile settlement options was more than 200 million in 2014. The value of such transactions totaled some $1 trillion, according to one survey.
"I can't do without it," a worker at Mazda Mortor's Chinese subsidiary in Shanghai said, holding an Apple iPhone. The phone has become her "wallet." She uses Alipay Wallet, the online payment application of Alibaba Group, which has a more than 80% share of China's mobile payments market.
"The only money in my bank account is for investing," she said. "The money I use for everyday needs is all in Alipay." Several passwords are required from when the app is launched to the point when payments are made.
Alipay Wallet offers a variety of options. Going to Alibaba's Taobao online auction site allows one to purchase not just apparel and food, but also movie and airline tickets. The app can also be used to pay credit card and utility bills. Unused funds draw more than 4% in annual interest.
One thing the Mazda worker particularly likes among the menu options is AA Group Pay. Suppose, for example, 10 people eat out together and run up a combined bill of 800 yuan($129). When the 10 launch the Alipay app and choose the AA Group Pay option, their smartphones recognize each other. The bill is split between the 10 people, and each pays 80 yuan.
The Mazda worker finds such apps convenient because their use is becoming widespread. "A growing number of stores are taking payments by allowing you to just pass your smartphone in front of a special terminal," she said.
According to a study by the China Internet Ntwork Information Center, the number of people using mobile payments climbed to more than 217 million by the end of 2014. The figure jumped 73% from the previous year. Around 40% of Chinese Internet users now pay for things with their mobiles. Market research company iResearch says the value of such payments was 5.99 trillion yuan -- five times more than the year before. Chinese media has dubbed 2014 year one for mobile payments.
One taxi driver uses mobile payments as a tool of his trade. For a year, he has been using Tencent's app, WeChat Payment, and a taxi dispatch app.
Electronic sounds from a smartphone mounted beside the steering wheel notify the driver of summons from passengers. "I find 20 passengers a day with this," the driver said. Once they arrive at their destination, the passengers use the WeChat app to pay their fare. "In the past year, the amount I take in each month increased 500-600 yuan," he said. The average monthly wage for a Shanghai taxi driver is around 5,000 yuan.
The app also has a function to indicate intent to pay the driver a tip. During Shanghai's morning and evening rush hours, one often sees empty taxis passing in front of people trying to hail cabs. The empty cars are on their way to pick up passengers who have said they will tip 5-20 yuan.
During this year's Chinese New Year holidays, the big thing was giving New Year's gifts via smartphone. "I saved a bundle," one Shanghai businessman said. Last year, he spent 50,000 yuan worth on gift money for his 40 workers and 20 relatives, which he handed out in traditional red envelopes. This year, he spent 15,000 yuan.
A campaign launched by Alibaba, Tencent and others allowed him to cut costs. The campaign sends one red envelope to multiple people, who may or may not hit the jackpot. From a single 300-yuan red envelope, for example, one recipient might get 280 yuan while another receives 1 yuan. "Regardless of the monetary value, it makes one feel like they have 'good fortune.' That isn't the case when you're handing out cash," the businessman explained. The gamelike nature of the campaign was well received. On Feb. 18, Chinese New Year's Eve, 1.01 billion red envelopes were exchanged via WeChat Payment.
China's online payment market has been around for more than a decade.
Alibaba began providing its Alipay settlement method for Internet shopping in 2004.
Initially, most users made payments via PC. As smartphones spread, Alibaba launched the Alipay Wallet in November 2013. The number of users has now climbed to some 200 million.
Alibaba is now working on a project called "future hospital." It will enable Alipay users to schedule hospital visits and pay their bills there with Alipay. This will enable everything from scheduling a visit through payments to be concluded online, which is both convenient and should improve efficiency at hospitals. Initially, nearly 40 hospitals will participate in the project, primarily in large cities including Shanghai and Beijing.
Tencent's WeChat Payment had 119 million users at the end of 2014, four times as many as at the end of 2013, according to an iResearch survey. The company aims to get the roughly 500 million people who use its chat app to start using its payment service. In August, it partnered on payments with major real estate agency Dalian Wanda Group and online search service Baidu. Wanda uses the app to draw customers to its brick-and-mortar stores.
According to iResearch, the scale of the online shopping market, which has been the impetus for providing mobile payment apps, reached 2.81 trillion yuan in 2014. By 2018, that figure is projected to grow to 7.3 trillion yuan. Mobile payment services appear to be growing even more rapidly. In China, they could total 18.25 trillion yuan in 2018, three times as much as in 2014, iResearch says.