Anyone who has been in China for a day knows that people do not carry cash around anymore; WeChat Pay and Alipay are default payment methods at places ranging from hospitals to your fruit vendor around by the corner. Now the burgeoning scene has been confirmed by numbers. As part of WeChat’s weeklong celebration of its second annual “Cashless Day” to be held on Aug 8, Tencent published a joint report with Chongyang Institute for Financial Studies at Renmin University and research firm Ipsos detailing the penetration of mobile payment in the country. The report shows a staggering 84% respondents who feel comfortable without carrying cash around because they have their mobile phones.
Major cities—including Beijing, Shenzhen, Guangzhou, Shanghai, and Chengdu—take the top five places in the report’s “overall smart life index” ranking, which measures cities’ mobile payment penetration in three categories: commerce, social, and welfare. But the trend is happening outside the big cities, too. Dongguan, the southern Chinese city outside of Shenzhen famously known as the factory of the world, comes in at number 5. Foshan, another small city in the region known for its furniture manufacturing, made it into the top 10. As the report states, smart cities are closing the city-rural gap in China.
Cashless penetration is slower among the older generation, however. The average amount of cash people carry declines with age, the report shows. People born in the 60s carry up to RMB 557 on average and the post-90s generation are going out with just RMB 172 in their pocket. Until WeChat Pay came around in 2013, the country was still largely a cash society as credit cards never took off in China like it did in the U.S. Transaction volume of mobile payment has jumped from $183 in 2013 to $2.4 trillion in 2016. China’s adoption rate of mobile payment solutions has grown to 73% this year, based on a survey released by YouGov in July.
As Ben Thompson, founder of tech analysis site Stratechery, puts it:
“The U.S. was first to credit cards, and everyone there has a personal computer. But China, where everyone is on their phones all the time, is now ahead in mobile commerce and mobile payments by virtue of leapfrogging the PC and credit cards.”