The 2020 Annual Conference of Financial Street Forum kicked off in Beijing last week. During a special session held on October 22, the White Paper on reporting China’s convenience payment industry in 2020 was jointly released by the Cloud Payment of the China Everbright Bank and the National School of Development (NSD) at Peking University (PKU).
The White Paper, aiming to further digitize government affairs, enhance urban governance, advance the development of smart cities and villages, and improve people’s livelihoods, was in the charge of Professor Xie Xuanli, Associate Professor at the NSD of PKE and a Senior Researcher at Institute of Digital Finance of PKU. The White Paper provides a comprehensive introduction and in-depth analysis into the current situation of China’s payment industry.
Researchers involved in compiling the White Paper found that the number of individuals, enterprises and government departments at all levels using various e-payment platforms had reached a new high. The massive uptake of app-based payment methods has dominated China’s payment industry. Besides, during the COVID-19 period, the pandemic even further drove e-commerce payments growth in China because Chinese consumers turn to online spending to avoid exposure to disease vectors. Therefore, the business forms with higher use of digital payment was less affected after China pressed the “pause” button in its economic development during the pandemic, and such businesses recovered from COVID-19 in a faster manner. Meanwhile, digital payment also plays a big role in developing smart cities, benefiting enterprises and bringing more convenience to residents, accelerating the pace of resuming work and production, and improving people’s livelihoods.
The number of China’s individual online payment deals has reached RMB 12.38 trillion, and corporate online payment is expected to be a new blue ocean
In 2020, China’s online payment industry ushers in new chapter.
The White Paper reveals that the individual online payment transactions in China stood at RMB 12.38 trillion in 2019, registering a 9% year-on-year increase. Among them, the e-payment for the use of domestic water, electricity, and gas reached RMB 5.2 trillion, and the non-cash payment transactions worth a total of RMB 7.18 trillion occurred in educational spending, property cost and highway toll fees.
Online payment has become consumers’ absolute favorite in increasing payment scenarios. Among them, the use of online payment in paying for the scheduled and immediate or future one-time payments reported a year-on-year increase of 31%, and the E-payment in emerging areas saw a 78% year-on-year growth. Although the rate of electronic payment transactions made by enterprises is not as high as by individuals, great market potential exists, with estimated valued of RMB 10 trillion. In particular, the huge number of small and micro enterprises with lower rate of the use of digital payment methods will be the driving force to fuel the development of China’s online payment market.
The Booming Digital Economy Makes E-Payment Faster and More Convenient
With the transformation of traditional industries and the adoption of regular prevention and control measures to prevent a resurgence of COVID-19, digital economy has been a new engine for economic growth, and various fields such as economy, society and environment will witness higher degree of digitization. Meanwhile, China is deepening reforms to streamline administration, delegate powers, improve regulation, and strengthen services. All localities are also simplifying the government review and approval process, and have accessed more government services via a single website and provided a set of online payment services to boost market vitality.
According to the analysis of the White Paper, with the application and development of new technologies, more pilot projects of smart cities have been approved in China. Consequently, more transactions will occur online. The e-payment security has been strengthened, and the online payment procedures have been further optimized. The convenience index of China’s online payment climbed to 80.4, up 1.8 from the year of 2018, benefiting more individuals and enterprises.
Looking forward: Online Payment will be the Prevalent Trend of Future
By applying new technologies, integrating new scenarios, and creating new business forms, we can further improve payment experience and make online payment more user-friendly to better meet users’ diversified service needs in different scenarios. It’s a compelling trend to build an openly shared payment industry featuring coexistence and co-prosperity.
Take China Everbright Group’s “Cloud Fee Payment” as an example. Since 2018, Everbright’s cloud payment platform has vigorously promoted online payment for non-tax related fees, such as social insurance premiums and traffic fines. It integrated multi-channel payment and settlement services into an all-in-one management platform, so that the public can make fewer visits to government departments to get things done. Currently, the non-tax related online payment services offered by the “Cloud Fee Payment” covers 28 provinces, municipalities and autonomous regions, and the users from 19 provinces, municipalities and autonomous regions can pay social security and traffic fines on the platform.
In addition, the online payment services provided by the “Cloud Fee Payment” has covered more than 9,400 items including water, electricity and gas fees, as well as medical and educational cost. It cooperates with WeChat, Alipay and over 540 banks， nearly covering all major Internet platforms across the country. Over the past three years, the platform has served over 650 million active users and the number has so far exceeded 350 million in 2020.
In the future, driven by the new technology such as 5G, AI, cloud computing, big data, and blockchain, convenient payment services will see more innovation in frictionless payment and smart charging, and online bill paying, including the scheduled and immediate or future one-time payments, will be made more like a one-stop shop, so that the industry is marching ahead with new open payment models.