Mobile Payments Surge Across Borders

\"Over the past year， 71 percent of Alipay payments have been completed on mobile devices，\" reads the year-end report sent to users of Alipay， China's largest online payments platform. \"The largest cross-border payment completed via QR code in 2016 was 268，645 yuan [US$41，330] by a user from Beijing.\"

Since its launch in 2004， Alipay has exploded in popularity across China， taking on a leading role in the global mobile payments market. As the overseas consumption capacity of Chinese consumers has grown， global usage of Chinese payment platforms has grown， too.

Global Leader in Mobile Payment

Participants at the 2016 G20 Summit marveled at a presentation of China's mobile payment platforms， particularly thanks to an eye-watering number of users. According to a recent report by the International Market Research Institute Kantar TNS， the Chinese mainland， Hong Kong SAR and South Korea now find themselves as the top three locations for mobile payments.

In terms of regional distribution， rates of mobile payment utilization compared to computer terminals are highest in less developed regions of China. Perhaps surprisingly， the Tibet Autonomous Region topped the country in mobile payments as a proportion of total online payments in 2016， with 90 percent of online payment transactions made via mobile devices. Qinghai and Gansu provinces ranked second and third， showing rates of mobile payments far higher than those of the country's coastal provinces.

Tibet's high rates of mobile payments have persisted since 2012. By the end of 2016， all of the region’s villages had mobile phone coverage. Farmers and herdsmen in even the most remote villages use mobile payment platforms to conduct daily commerce.

According to Alipay， in 2016， the average Tibetan topped up their mobile phone 16.7 times via Alipay， a figure higher than the rest of the country.

In terms of age distribution， the percentage of mobile payments by “internet natives” — millennials born in the 1990s — was extremely high， totaling around 92 percent.

A new report jointly published by China's National Bureau of Statistics and Alipay indicates that over the last six years， money spent on leisure activities in China has increased 20-fold. In contrast to the United States in the 1920s or Japan in the 1970s， the most influential consumers in China today are to a large extent not members of a growing middle class， but millennials.

Millennials in China account for more than 400 million people， five times the number in the same demographic group in the United States. Goldman Sachs， an American bank， has forecast that the average annual income of China's millennials will increase from US$5，900 in 2014 to US$13，000 in 2024. Millennials are set to dominate consumption patterns for the next 10 years. Alipay data show that Chinese born in the 1980s made an average online payment of more than 120，000 yuan （US$18，480） per person in 2016 — a monthly average of 10，000 yuan （US$1，540）.

In 2016， five provinces and municipalities crossed the threshold of 100，000 yuan （US$15，385） per-person per-year — Shanghai， Zhejiang， Beijing， Fujian and Jiangsu.

Growing Globally

Alipay's popularity in China has begun to cross borders. In 2016， the number of Chinese outbound tourists increased 160 percent year-on-year. An increasing number of tourists are traveling overseas with their families.

Alipay’s cross-border consumption data lists the top 10 shopping destinations for tourists from the Chinese mainland — South Korea， Hong Kong， Thailand， Macao， Taiwan， Japan， Australia， Singapore， New Zealand and Germany.

Credit payment is growing in China as well. More than 3.2 billion payments were made with Ant Check Later （an Alipay consumer credit service） in 2016， a 344 percent increase compared with the previous year. Ppdai， Alipay’s peer-to-peer lending service， has more than 12 million users， with cumulative loans of more than 300 billion yuan （US$46 billion）.

Chinese attitudes toward consumption are changing as credit payments begin to grow more common. In Tibet in 2016， the number of consumers who spent money with Ant Check Later grew by 220 percent compared with 2015. Total credit acquired from Any Check Later increased by 380 percent.

Rapid Development with Tighter Security

Li Xiaofeng， former deputy director general of the People's Bank of China's Technology Department， said that with the rapid development of online payments， unforeseen problems have surfaced. Maintaining security is a pressing challenge， Li said.

The emergence of these security threats is due to weakness in mobile payment security. Despite being the most important device used in mobile payments， mobile phones do not have any effective preventative measures， Li added.

Additionally， there are no relevant standards to support the security check of mobile payment environments and user identification. Li said that data security and mobile finance must be supported by more secure payment systems.

Fraud is a common problem in cross-border e-commerce， and has caused losses for firms across a wide range of industries. In some cases， companies have declined to do business with potential customers for fear of incurring losses， which has had a serious negative impact on company development and customer experience.

Ba Shusong， a chief economist at the China Banking Association （CBA）， suggests that the internal management and risk control capabilities of major online payment institutions should be regularly improved， and their risk management standards should be upgraded. With an increase of online payment transactions， risk management awareness and internal controls should be strengthened.