Alipay and WeChat were the twin pillars of an almost $US3 trillion monument to the eye-watering scale of Chinese digital payments last year, with the daily use of digital payment platforms and networks increasing “20-fold” since 2012.
According to a report from the UN-based Better Than Cash Alliance, payments on messaging and e-commerce platforms will add $US236 billion to China's GDP by 2025, while the impact that digital payments, across existing platforms and networks, in China is tantamount to the provision of a wholly different and inclusive range of digital financial services.
The study, released this week, analyses social networks, e-commerce platforms and the growth of digital payment ecosystems in China, as the middle kingdom continues to lead the world in the transition from cash to digital payments.
According to McKinsey Global, this shift could increase GDP across developing economies by a full six per cent (by 2025), adding US$3.7 trillion and 95 million jobs.
The report identifies the emergence of platforms such as Alibaba's Yu'e Bao which have made investing money into diverse sets of financial products suddenly accessible to low-income groups, allowing investments of money left on digital accounts and achieving incremental to long-term savings.
From 2013 to 2016, Yu'e Bao has grown to manage US$117 billion of more than 152 million customers.
According to Eric Jing, CEO of Alibaba’s digital payments affiliate, Ant Financial - the operator of Alipay – the revolution in payments is expanding financial inclusion and economic opportunity throughout China and into neighboring countries.
“Widening access to financial services has always been at the heart of Ant Financial's mission and we are proud to have empowered more people to save, invest and gain access to capital,” Jing said.
The study showed both Alipay and WeChat are already expanding well beyond the mainland and are aggressively investing in major fintech and payments providers – from India to the US.
“Social networks and e-commerce platforms are growing in every economy, whether large or small," says Ruth Goodwin-Groen, managing director at the Better Than Cash Alliance.
According to the Goodwin-Groen, China digital payments are thriving through these networks, “bringing millions of people into the economy and utilizing existing social networks and e-commerce platforms to drive digital payments and financial inclusion".
“This matters because we know that when people - especially women - gain access to financial services, they are able to save, build assets, weather financial shocks and have a better chance to improve their lives," she said.
According to the UN-backed report, opportunities are especially strong in countries with a high smartphone uptake and intense collaboration between the private and public sectors. In India, for example, both Ant Financial and Tencent have bought into the local mobile payments market, which is enjoying rapid growth and stronger governance through new regulation.
Ant Financial and Alibaba invested up to $US900 million in PayTM, with the service growing from five million to around 200 million users in just three years. According to Ant Financial, there is a quiet revolution underway to improve services to the financially excluded.
“And we know, firsthand, that our services are making a real difference to hundreds of millions of consumers,” Jing said. “But … this revolution is only just beginning. We see tremendous potential to bring many more people into the financial system, in China and markets around the world."