Shipping methods in China

Payment methods in China: How China became a mobile-first nation

Paying through mobile phones has become second nature for the majority of Chinese. By the end of 2021, around 903.6 million people utilized mobile payments in China, which equals roughly 64% of the overall population. In China’s largest cities, residents pay on average 80% of their monthly expenditures (roughly 5,000 Yuan) through mobile payment services, while in fourth- and fifth- tier city residents use these means for 90% (3,000 Yuan) of their monthly expenditures, according to a 2021 China UnionPay report.

By the end of 2022, the cumulated digital payment value in China is set to reach 3.5 trillion USD, making the country a clear global leader for digital payments, followed by the United States with 1.8 trillion USD.

According to 2021 year-end statistics, the People’s Bank of China (PBOC) processed 275 billion electronic payment transactions in that year, which is a 16.9% increase compared to 2020. 151.22 billion mobile payment transactions have been registered, representing a year-on-year increase of 22.7%.

Source: iiMedia, designed by Daxue Consulting, Daily usage frequency of mobile payment in China 2022.

COVID-19 boosted online and mobile payments in China

While mobile payments were already ubiquitous in China pre COVID-19, the pandemic has been accelerating the mobile payment trend even more drastically. In February 2020, the Payment & Clearing Association of China (PCAC) launched an action to encourage mobile payment usage, online payment, and QR payment to lower the risk of infection. A huge shift was visible in payment statists of all major Chinese mobile payment platforms released in March 2020. According to Zhuanlan, UnionPay handled transactions worth 1.4 billion Yuan per day, an increase of 54.6% year-on-year. Alipay reported, that the payment frequency around sightseeing spots has increased by 120%. Similarly, the usage of WeChat pay in restaurants has gone up by 447% compared to March 2019.

Transaction growth has been steady throughout 2021 and continues to develop in 2022. During Spring Festival 2022, 20.8 billion transactions amounting to 14.9 trillion Yuan, were reported by the PBOC. This represents an increase of 10.0% and 16.2% respectively over the same period last year.

The history of mobile payment in China

In 2018, around 83% of all payments were made via mobile payment modes. China has developed differently in terms of payment methods: while most countries have switched from cash to credit cards and are now switching to mobile phones, China has skipped this step. The use of credit cards in China is sporadic, if not non-existent. Even though mobile payment is overgrowing worldwide, China leads globally with a large margin in terms of mobile payment penetration, with a total penetration rate for all forms of mobile payment sitting at 87.6% in 2021. The penetration rate of mobile payments processed via smartphone applications is 40.4% in China in 2022.

Source: People’s Bank of China, Zhiyan Consulting, chart by Daxue Consulting, Mobile payment share of total electronic payments in China 2014 – 2021.
Source: Statista Digital Market Outlook, chart by Daxue Consulting, Mobile payment penetration rate via smartphone applications 2022

How does mobile payment work in China?

This increase in the use of smartphone payments in China is linked to the growth of e-commerce and m-commerce.  In 2020, China’s e-commerce market boasted sales of roughly 2.2 trillion USD, with  24.5% of total retail sales in consumer goods in 2020 stemming from e-commerce.

Source: Statista Digital Market Outlook, Statista, designed by Daxue Consulting, e-commerce market size in China 2018 – 2021

In China QR Codes for paying and collecting money are prevalent in China; even street musicians use QR Codes to collect money. There are two ways to pay via QR Codes in China:

  1. The customer scans the seller’s QR code, which is often printed and visible at the checkout, on restaurant tables, and even on products in stores. The customer then chooses the amount and can send the money directly to the seller, showing a transaction confirmation to the seller afterward.
  2. The customer shows their own QR code displayed on their smartphone, the seller selects the amount to be deducted and scans the QR code. This method is even simpler and faster as it removes the additional step of transaction confirmation.

Unlike Apple Pay, which requires sellers to buy technical equipment to receive payments, in China, a simple piece of paper printed with the QR code is enough. Thus, mobile payment has gained such momentum in China, as it is easy, fast, and accessible to any customer who owns a mobile device.

Where are mobile payment services used in China?

From convenience stores to large shopping malls, from the purchases of subway tickets to the payment of flight tickets, mobile payment can be used in everywhere in China.

Data source:, designed by Daxue Consulting, main payment scenarios of China mobile payment platform users 2020H1

With the popularity of e-commerce, online mobile payment has become the main payment method on e-commerce websites in China. Consumers can directly use payment platforms to complete online orders, and also scan the QR code provided by online sellers via payment apps. Consumers can also pay for their home’s water, gas, and other utility bills on mobile payment apps.

Offline mobile payment refers to NFC (Near-field Communication), QR codes, facial recognition, and so on. Offline mobile payments are widely used for small and high-frequency consumptions, like convenience stores and restaurants. It mainly relies on devices such as code readers, POS machines, and smartphones. In addition, offline mobile payments in China are widely used in public transportation, hospital appointment, and parking lots.

What is the situation of Chinese payment systems in 2022?

In 2021, WeChat Pay and Alipay accounted for 91% of all digital payments made in China. To allow for improved financial supervision the Ministry of Industry and Information Technology (MIIT) unveiled a 2021 policy aiming at establishing interoperability between all mobile payment platforms, especially focussed on opening the payment systems of the two industry leaders to state-owned China UnionPay’s Cloud QuickPass. This means that QR Codes generated within each mobile payment platform can now be accessed and used within other Chinese mobile payment apps as well. Additionally, after trials started in 2020, all three platforms have also included the option to utilize China’s digital currency the e-RMB in 2022, although consumer acceptance has been sluggish.

How safe are mobile payments in China?

According to a 2022 survey, 88.2% of mobile payment users are satisfied with available services, while 68% of respondents named improved payment safety as their main expectation for future mobile payment service developments. On the user side, biometric identification methods such as fingerprints and face recognition are the most utilized authentication methods for mobile payments in China, far exceeding password verification.

Source:; a scannable fake code covering the real QR code on a sharing bicycle, which led to a mobile payment scam

In 2020, 8% of users experienced some sort of mobile payment fraud, out of which about 75% were scam messages, according to a ChinaUnion Pay survey. The majority of mobile payment frauds happen in a situation where users utilize a single password for all of their payment methods, are connected to public Wi-fi, or scan fake QR codes. To uphold mobile payment security, many payment providers have launched measures such as complex transaction password encryption, as well as upper limits for single and daily transaction sums.

Which mobile payment providers exist in China?

WeChat Pay and Alipay entered the mobile payment market early and gained a head start by leveraging their pre-existing user base (WeChat and Alibaba customers respectively).

Source: Statista Global Consumer Survey (GCS), chart by Daxue Consulting, Top ten most used online payment services in China 2022 – mobile payment provider used within the last year as of May 2022.

WeChat Pay (a platform by Tenpay, also owning QQ Wallet)

Mobile payments in China

WeChat Pay has the biggest market share by penetration rate in China, with 92.7% in 2020. Developed in 2013 by Tencent Company, which owns the most popular social media platform in China, Wechat (Weixin).

WeChat, the Chinese instant messaging giant, has 1.3 billion monthly active users as of the first quarter of 2022, whereas Apple Pay with its 127 million monthly active users worldwide can hardly compare. The popularity of WeChat can be traced back to its multi-modal interface, encompassing not only social media services but also mobile payment services, as well as interoperability with various in-app applications. WeChat pay’s strategy in China is to extend its services to various financial products – from investment funds to insurance, allowing users to pay for it directly within the app.

WeChat Pay transaction fees of 0.1% only start at withdrawals over 10,000 Yuan as well as overseas transactions such as in case of cross-border commerce. The app currently supports 9 currencies, against 14 for AliPay in 2022. Cross-border transactions can still be complicated, but WeChat has recently partnered with Adyen, an international payment technology company to facilitate access to China for foreign companies.


leading shopping website in China

Alipay is owned by Ant Group, an affiliate company of Alibaba Group.

As of June 2020, Alipay had 1 billion users worldwide and had 640 million monthly active users in December 2021, and 80 million active merchants. Many major websites use Alipay as an e-commerce payment method, such as Taobao, Amazon,, and AirAsia

To increase trust between sellers and customers, Alipay has introduced two different payment modes:

  • Escrow payment for buying physical goods: the payment is made but transaction completion is deferred by Alipay until the customer confirms the receipt of goods
  • Immediate payment for buying services: the payment is immediately transferred to the seller; this service is vital for hotel bookings, flight reservations etc.

In 2017, Alipay entered the US market through a partnership with First Data, and in 2019 the UK market by teaming up with Barclaycard. Additionally, Alipay is also active in a dozen further markets across Asia and Europa, allowing some users to transfer money immediately to China.

Additionally, with the development of advanced biometric technology, Alipay’s facial-recognition payment became popular among consumers with an offline preference, as it allows consumers to go out and shop without even bringing a mobile phone.

China Union Pay

China UnionPay

Union Pay is the world’s largest payment card issuer with approximately 30% of cards worldwide being a China UnionPay card (CUP). China Union Pay is the only domestic bank card issuer in China, linking the ATMs of 14 major banks and many smaller banks throughout mainland China. It is also an Electronic Funds Transfer at Point of Sale (EFTPOS). Many sizeable international e-Commerce merchants in China are choosing to offer liberal return policies for card payments, rather than provide a Cash on Delivery option, making UnionPay card payments the preferred online payment method for international merchants in China.

UnionPay entered into reciprocal card agreements with other payment networks to enter foreign markets, being present in most Asian markets as of 2022. Furthermore, UnionPay established agreements with luxury retailers and major drug stores across the US and in Europe.

Meituan Pay

Meituan is a popular Chinese online to offline platform. When Meituan users order food delivery, they have a range of payment options, including WeChat Pay, Alipay Pay, as well as its own proprietary Meituan Pay. Meituan has wide offline services and offers discounts to users who choose Meituan Pay at online or offline checkout, which results in a preference for Meituan Pay for the highly price-conscious consumer segment.

Following the 2021 government policy to improve mobile payment market competition and regulate monopolies, Meituan remodeled its payment model from previously only accepting Metuan Pay to open up the app for payments via WeChat Pay, Alipay, UnionPay Cloud Flash Payment, Apple Pay, etc.

How do consumers pay in China?

Cash on Delivery (COD)

Cash on delivery makes up the largest percentage of online payment methods in China, utilized by market giants Dangdang, Amazon, and COD is a payment method in which it is the carrier ensures the collection of payment in return for part of the goods and takes care of the return of the amount to the seller.

There are many reasons for the preference for this payment method in China. Firstly, goods can be quality assured by the receiver before payment. Secondly, people that do not have online payment accounts (e.g., senior or rural citizens), tend to choose this method. COD payment can be made through cash (uncommon), certified checks or money order.

Credit Cards in China (China UnionPay cards)

International cards such as Visa and MasterCard are not commonly used online payment methods, due to the low trust associated with foreign credit cards in China.

Domestic usage of China UnionPay credit cards has stagnated around the 40% mark since 2013. In 2019, the utilization rate of credit cards was 43.7% with 746 million cards issued that year.

Foreigners living in China can apply for Chinese credit cards. However, not all banks in China allow foreigners to apply for a Chinese credit card and documents might only be filled out in Chinese. The requirements for Chinese credit cards can vary depending on the bank branch but generally a minimum of the following documents are required:

  • Passport (including visa)
  • Residence / work permit
  • Proof of income / multiple finance certificates, such as tax payments 

Debit Cards (China UnionPay cards)

Debit cards are widely used by Chinese consumers for Internet purchases. The funds paid using a debit card are transferred immediately from the bearer’s account through the use of a “push payment“ principle. During the online payment process, users are directed to their personal bank account where they physically log in and authorize the transaction.

Although COD makes up the most significant percentage of Chinese online payment methods, the trend toward using debit cards is continually increasing as more domestic and international online merchants integrate the option of online card payments on their websites.

Crypto in China

Cryptocurrencies saw a boom in China, with the country quickly becoming the biggest mining country in the world. However, in September 2021, the Chinese government outlawed all private crypto-related transactions, citing worries about speculative investments, volatile price swings, fraud, and money laundering. At the same time, the People’s Bank of China announced its intentions to create a state-controlled cryptocurrency, the digital Yuan, to improve the international importance of Renminbi transactions.

How can foreign businesses use mobile payments in China to reach more customers?

Create official accounts to provide special offers

Alipay and WeChat Pay offer the possibility to set up individual marketing campaigns. Customers can be attracted through in-app coupons and promotions. Usually, Chinese companies offer coupons during festivities and events such as Golden Week, Singles Day, Chinese New Year, etc.  

In WeChat it is also possible to offer membership cards which are virtual discount cards, allowing for cumulative discounts depending on loyalty level. WeChat also offers sellers statistical data on the success of their promotions, such as data on click-through rates.

Allow mobile payment methods for Chinese tourists abroad

According to a 2018 survey by Nielsen and Alipay, 91% of Chinese tourists would consume more if overseas merchants had Chinese mobile payment options. Allowing mobile payments for Chinese customers is what many countries are doing. According to Alipay’s statistics, in 2018, the number of mobile payment transactions increased 75 times in Russia, 12 times in Canada and eight times in Malaysia. The same phenomenon has been observed in New Zealand, Australia, and Finland.

Phone payment in China
Mobile payments in China – Source: Nielsen 2018, designed by Daxue Consulting. Overseas mobile payments by Chinese tourists

The Galeries Lafayette group in France, whose Chinese customers represent approximately 25% of its 2 billion Euro turnover, now also accepts WeChat payments. For the company, this is a logical step in its strategy to conquer the Chinese tourism market.

In 2019, German drugstore giant dm, with its huge following among adolescent Chinese customers, selected a similar approach, equipping all of its more than 3,800 stores in Europe with the technical equipment to process WeChat Pay, Alipay and China Union pay transactions.  

How can foreigners use Chinese payment systems in 2022?

Do foreign credit cards work in China?

Foreign credit cards are not widely accepted in China. Visa and MasterCard are generally only accepted in places that provide services for foreign tourists, such as international hotel chains. Cash withdrawal through ATMs with international credit cards only works through China’s biggest banks. Daily withdrawal limits vary but generally hover around 800 – 1,000 Yuan. In some cases, fees may apply.

Using foreign credit cards in China is not recommended, as terminals often do not possess the software to handle foreign cards. Additionally, the majority of basic card reader terminals often cannot process Visa and MasterCards, as their pin codes only contain four digits, but terminals are set to the Chinese standard of six-digit pin codes.

Can foreigners open a WeChat Pay account?

Foreigners living in China can open WeChat Pay accounts if they are in possession of a Chinese bank card and a mobile phone number linked to the card. Opening an account can be done through the “Wallet” option in WeChat, where the user must put in their name, date of birth, Chinese phone number, credit card number, and upload a picture of their passport. Approval takes approximately one day.

Tourists can set up a WeChat Pay account for their holidays, linking their international credit cards. Currently, Tencent cooperates with five major international card organizations – Visa, Mastercard, American Express, Discover Global Network, JCB. The opening of a tourist account follows a similar step as the regular account. To open an account, users have to provide information on their nationality, passport number and a picture of the passport, full name and date of birth. A service fee of 0.35 Yuan will be charged for every international credit card linked to the account.

How to set up Alipay as a foreigner

Similar to WeChat Pay, foreigners living in China can open Alipay accounts if they own a Chinese credit card and phone number. Opening an account can be done through the Chinese version of the Alipay app, requiring real name authentication by providing the user’s name, date of birth, Chinese phone number, credit card number, and upload a picture of their passport.

Tourists can use Alipay through the “TourPass” option on the international version of the app. This feature allows users to deposit money into Alipay with international credit cards without Chinese bank accounts. Alipay has arrangements with over 60 Chinese banks, including Visa and Mastercard. However, since the QR code of the TourPass is different from the regular Alipay QR code, not all vendors possess the technical equipment to process TourPass transactions.

To set up an Alipay business account, foreign companies need to pay USD 1,000. Transaction fees are 2.5 – 3.0% depending on annual transaction volume.

Key takeaways about mobile payments in China

  • Mobile payment usage has been on a steady rise since the 2010s, making up more than half of all digital payment transactions in 2021 and is projected to rise further due to high public acceptance and government incentives
  • Chinese customers, both domestically and traveling abroad, show a preference for increased consumption if foreign companies offer mobile payment options
  • In 2021 government regulations leveled the playing field between mobile payment providers by mandating inter-app operability of QR codes and mandatory acceptance of third-party mobile payment methods on consumption platforms
  • Mobile payment is generally safe in China, providers offer various authentication methods and continuously improve security protocols to meet the growing domestic security awareness
  • Foreign residents in China can set up mobile payment accounts, if they are in possession of a residence permit and a Chinese bank account; foreign tourists in China have the option to set up a tourist mobile payment account linked to their international credit cards

Author: Alexandra Schirmer

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