China predicted to lead the field in Contactless Payments

ch_cc1

By Eve Pearce;

The number of payments made through Near Field Communication (NFC) technology in China is expected to rise by 52.7 percent in 2013, according to new research.

The findings, which were released as part of the World Payments Report 2012 by Capgemini, predicted that China would see exponential growth in the number of contactless payments made, with the total amount of electronic payment transactions likely to tip US $31.4 billion by the end of this year.

The number of transactions has been increasing steadily for the past four years, with annual growth standing at 20 percent since 2008. However, this significant leap in adoption of the technology in 2013 is likely to see annual transaction amounts reach US $17 billion for this year alone.

Several Asia-Pacific countries have already experienced a mass adoption of contactless payment technologies; in Japan, Australia and South Korea, for example, it is now considered commonplace for consumers to purchase goods via platforms on their mobile phones. With these countries standing as an example of seamless payment technology, eyes are now turning to rapidly emerging markets such as China, Brazil, India and Russia, which are expected to be next in line to adopt such technologies. Leading economists and retail experts expect the next few years to be pivotal in terms of mass adoption. “The Asia-Pacific, with a vast population, is going to be one of the key markets for growth,” confirmed a spokesperson for Capgemini.

China’s technology capital

Shanghai is fast becoming China’s centre for contactless payment technology, as innovative technology firms and entrepreneurs compete to take advantage of this vast marketplace. This month alone, there have been 26 new licences granted by authorities for new e-payment companies in China; six of these are in Shanghai. Dubbed China’s answer to Silicon Valley, this vast city already boasts 51 e-payment companies – more than a quarter of all such companies listed in China.

Commercial adoption   

Earlier this year, research showed that many firms operating in emerging markets were making electronic payment channels standard practice for conducting business. Visa was one of the largest companies to affirm the mainstream appeal of contactless payment methods in emerging markets; the finance giant announced that 40 percent of its contactless payment transactions originated from emerging economies such as China. Indeed, China has been making steady progress in introducing NRC to its citizens since 2009 when it introduced the China National Advanced Payment System (CNAPS). The new system was originally designed to enable corporate firms to easily initiate mobile payments, e-billing and real time payments.

China isn’t the only country that is leading the way for NRC payment technology; Kenya’s M-PESA system, for example, allows citizens to embrace the country’s mobile boom by paying for goods via their mobile, without the need for cash. The system was quick to catch on in Kenya, and now boasts more than 19 million users who account for 83 percent of the county’s entire adult population. Collectively, M-PESA users now transfer almost US $8 billion every year. Not only does M-PESA enable its members to pay for a variety of conveniences without cash, but it also provides a simple, effective means through which they can control, manage and transfer finances amongst each other.

Huge untapped market

In 2011, US $14.413 trillion was exchanged by consumers via cash transactions, according to Euromonitor. The gap between mobile and cash payments is narrowing; this is being driven by emerging markets, which are leap-frogging their developed counterparts by the early adoption of new mobile technologies. Developing countries are leaping straight from 2G to 4G, completely bypassing 3G (Angola, for example, received 4G before most of Europe). At the start of this year, analysts at IDC Financial Insight estimated that purchases made via mobile devices would exceed US $1 trillion by 2017. A large proportion of this amount will be made up by digital media, but an increasing amount will come from eCommerce through mobile web browsers and store apps.

More mobiles than people

As of 2012, there are now more mobile devices in the world than people; IDC predicts that this proliferation of mobile devices – particularly smartphones – will lead to further rapid growth for the global m-commerce industry. Aaron McPherson, a director at IDC Financial Insights concluded: “We expect growth rates to continue to accelerate as consumers and retailers become more comfortable with the technology.”

Advertisements

Tags: , , , , ,

Categories: Featured Article

Subscribe

Connect with us here

Trackbacks/Pingbacks

  1. Apple Pay: Playing Catch-Up With Asia | ClickZ UK - October 19, 2015

    […] 2013, CapGemini was predicting China’s dominance in the contactless payment market. In fact, China introduced payments via NFC as early as 2009, when it established the China […]

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: