According to iResearch, the growth of mobile payments in China is likely to be driven by,
- The country’s expanding mobile internet economy. iResearch revealed that the scale of China’s mobile internet economy reached RMB97.6b as of 2012, up 148% YoY, much higher than the 46% YoY growth of the desktop-based internet economy during the same period.
- Smartphone user base. Smartphone ownership in China reached 320m, up 88% YoY. iResearch expects China’s smartphone penetration rate to exceed 50% by 2016. The expanding base of smart terminals and maturing mobile internet models are likely to drive the growth in mobile payments in China.
- Technology evolution – Mobile internet connection speeds have been greatly enhanced due to the adoption of 3G and 3G+ technologies. This has indeed driven a shift of internet activity from desktops to mobile devices, thus raising more demand for services such as mobile payments.
Mobile payments saw roughly RMB151.1b transaction volume in China in 2012, up 89% YoY. In terms of means of payment, mobile remote payments accounted for an absolute majority (~97.4%) of overall mobile payment transactions, including mobile internet payments (~51.7%) and SMS-based payments (~45.7%). iResearch expects SMS-driven payments to decline sharply in the next couple of years as the mobile internet becomes more dominant.
NFC (near-field communications)-based payments, representing a 2.6% market share in 2012, is still very much in a nascent stage. A survey conducted by iResearch in November 2012 revealed that NFC-based payments is the most anticipated payment method for 2013, representing ~24% of total respondents. A relative lack of industry standards and payment infrastructure (often involving the costly replacement of payment terminals), NFC-based payments is likely to maintain a low single-digit market share from 2013-2015, despite expected strong growth in absolute value.