Along with the fast-growing online shopping industry in China, online payment has been an up-and-coming online market segment over the past few years. As of 2014, Alibaba was China’s largest online shopping site, dominating B2B, B2C and C2C online shopping. The Chinese e-commerce giant became one of the most valuable tech companies worldwide after its U.S. initial public offering in September 2014. Alipay, the third-party online payment platform developed by Alibaba Group, has been the most popular online shopping payment method in China.
The popularity of credit cards among Chinese generally ranged much lower than with their counterparts in developed countries. Another snag holding back e-commerce in China was to be seen in the domestic consumers’ lack of trust. Alipay provided a solution to both problems, as it cooperates with numerous banks which allow for debit card payment, and the mechanism of Alipay helps increase trust between buyers and sellers. The introduction of Alipay contributed considerably to the prosperity of Chinese online payment industry. The penetration rate of online payment in China soared from 17 percent in 2008 to more than 40 percent in 2013.
A trend influencing the online payment industry is the migration of internet users to smartphones. Many believe that there is considerable scope for expansion in China’s mobile payment industry. The transaction volume of third-party mobile payment in China came to approximately 200 million U.S. dollars in 2013, but is projected to grow nearly nine-fold by 2017. Thus, it is important for third-party payment companies to win the race of going mobile. As of the second quarter in 2014, Alipay was the leading third-party payment providerin the country. TenPay, provided by China’s largest internet company Tencent, is Alipay’s toughest rival in mobile payment.
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