Outlook of Mobile Payment Industry 2014

At the beginning of this year, WeChat put forward red envelope; On Feb. 8th, 2014, Alipay released trading data, then it launched online “Yuanxiao Finance” on Feb.14th, selling out the first 0.38 billion Yuan universal insurance products. iResearch has made an analysis of these hot events on internet finance during the first month of the lunar horse year, and forecasted the future development of internet finance.
   
Two Giants in Mobile Payment
   
The statistics from iResearch shows that GMV of Alipay mobile payment amounted to 47.64 billion Yuan in 2012, hence Alipay turned into the biggest mobile payment company in China. In 2013, the figure reached to 905.75 billion Yuan, 19 times more than last year, with its market share rising to 74.3% from 31.5% of 2012. Data from mUserTracker launched by iResearch indicates that monthly unique visitors of Alipay Wallet app increased to 0.13 billion in Dec.2013, up 106.6% compared with the same period of the previous year; Use frequency of the app per user exceeded 30 times in the month alone, and it became the financial app with the strongest stickiness.

iResearch believes that Alipay propelled promotion and popularization of Alipay’s mobile payment products through upgrading its products and service, launching Yu Ebao and accelerating expansion of the market. Firstly, the promotion of online payment significantly raised users’ awareness at the initial period conspicuously. Accounts transfer, repayment and charges in apps as well as Alibaba e-commerce platform brought early users and trades and played core role in developing the habits of users; Secondly, a dramatic upsurge of user stickiness was incurred by the arrival of Yu Ebao. As a consequence, users and trades kept growing directly and trading frequency of users in other scene maintained going up, pushing up users’ long-term loyalty on the basis of Yu Ebao; Finally, Alipay also expedited use of mobile payment in offline payment scene, building a previous foundation for its offline penetration.

iResearch holds that relying on Alibaba finance, Alipay wallet app will turn into a comprehensive financial account, providing all-round settlements, investment, money management and credit service on the basis of traditional bank account.

New Emerging Force

The data of iResearch shows total GMV of Tenpay including WeChat payment, arrived at 52 billionYuan in 2013, ending up a growth rate of 600.0%. Moreover, by joining hands with WeChat, Tenpay released WeChat payment products in Q3, 2013. According to iResearch, GMV of WeChat payment reached nearly 10 billion Yuan based on real disclosure of enterprises in 2013. Data from mUserTracker reveals that monthly unique visitors of Tenpay app totaled 14,978,000 in Dec.2013, increasing by 62.7% from Dec.2012. Therefore,Tenpay was the second biggest mobile payment app following Alipay.

iResearch holds the views that WeChat payment is obviously different from Alipay wallet and Tenpay mobile payment, which are seriously homogeneous. As a quick payment product depending on WeChat account, WeChat payment owns the

 following three key advantages.

Firstly, it grasps the potential advantage of user resource. WeChat has more than 0.6 billion users with balanced structure and strong stickiness, who are more willing to adopt WeChat payment according to different services.

Secondly, WeChat has a large number of merchants. Except for the traditional merchants on PC and mobile devices, more offline potential merchants will bring more demand and bigger increase with the commercialization of WeChat;

In the end, a mature ecosystem has been built in WeChat. WeChat payment closed O2O e-commerce ecosystem cycle of WeChat, making it possible to supply integrated services, including membership management, credit management, promotions and payment functions, which can satiate the comprehensive needs of different merchants. iResearch views that based on its own unique characteristics, WeChat payment will wield its magnificent competitiveness in O2O E-commerce.
      
It is an key period for Chinese mobile payment industry to shift from online to offline development. However, third-party payment enterprises, while possessing a large number of users, will confront the problem to supply more trading scenario offline. They have to cater for existing users’ demand for quick payment in one hand, and explore potential needs of mobile payment in the other.

iResearch points out, seen from cultivating users’ habits, increase users as well as expanding merchant groups, most important scenarios they have to explore will have following features:
Firstly, the scenarios should cover massive target users and contact with them to the maximum extent.
Secondly, the scenarios should have moderate high stickiness and use frequencies, so that users’ habits can be fostered.
Thirdly, merchants should have following demands: strong demand for E-commercialization and internet mode, demand for diversity of payment methods and demand for improvement of client management and sales management system.

Mobile payment industry chain will change.

From the end of 2013 to present, Alipay and Tenpay has been in fierce competition in supermarket, shopping mall, franchised store, vending machine, convenience stores, map, O2O App and other use scenarios like taxi-hailing. iResearch analyzes that no matter how much determination they took to eliminate the other, the battle will not inflict indeed effects on market share. The real influence is exercised on users’ awareness, familiarity and usage of mobile internet payment products and O2O app. As a result, its user stickiness is to be enhanced. Finally, iResearch forecasted that while O2O is stickier to users, mobile payment users will soar and two giants will dominate the market in the future after the process of market cultivating.

While two giants compete for the offline market, NFC payment market co-developed by bank, UnionPay and communication operator was run without any improvement. The main obstacle for its development is as follows. Firstly, it was the low collaborative efficiency incurred by related entities in the industry chains. Apart from that, Regulated by traditional finance, efficiency of some innovative plans on NPC payment offline is reduced. In addition, the most vital factor posing the barricade is the low penetration of NFC terminal, which could not satisfy the demand for expansion of users and merchants.

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