The growth of mobile payments in China and the role played by Covid-19 pandemic in accelerating this trend: the impact on the economy and on companies

Abstract

When we speak about mobile payments, we refer to all the transactions made through a mobile device instead of using cash, credit cards, bank cards or cheques. The increase in the use of mobile payments across the world has transformed economies and will continue to have a positive impact on economy and companies. On one side the development of mobile payments will inevitably lead to a decrease in the quantity of circulating money, therefore cash remain into the banking system for longer and there are more possibilities to offer loans. On the other side companies will take benefit from this because mobile payments are convenient, fast, and safe. Companies can save money due to the lower cost of transactions and increase the number of customers thanks to the easy process offered by mobile payments. We can notice that this positive impact on economies especially affects developing countries. China (despite being the world’s second largest economy, China is still categorized as a developing country) is considered “the giant” of cashless. The late development is the reason why China is the leader of the mobile payments’ revolution. The advantage of late development is that China skipped from cash payments right to mobile payments without going through bank cards or credit cards. Covid-19 pandemic played an important role in accelerating the growth of mobile payment services, in fact the fear of contracting the virus pushed consumers to change the way they make payments, this will result in a strong decline in cash payment and a rapid increase in mobile payments’ usage. In my study I analyze the development of mobile payments in China before and after the pandemic and the difference in the growth compared to Italy, Sweden, and US (where the process of switching to this new trend seems to be more difficult and slower) focusing on the economic impact of a cash-less society. Collected data will be confirmed through statistics and analyzing the answers to the survey questions. According to the 2019 Mobile Payments Market – Growth, Trends, and Forecast (2020-2025), the use of mobile payments will keep growing with an annual growth rate of 26.93% between 2020 – 2025 and another statistic of eMarketer forecasts that by 2023 the mobile payments users will be 1.31 billion. Statistics show us that the mobile payments revolution doesn’t seem to stop, we are entering into a cashless economy, and we have to get used to it.