China has, until very recently, been a predominantly cash market. Despite the largest denomination of banknote being a meager 100RMB (about US$15), shoppers would still choose to make large payments with thick stacks of bills. Unsurprisingly, over the past few years China has been one of the fastest countries to ditch cash in favor of alternative payments. The mobile payments sector in particular has seen huge developments and widespread adoption among consumers.
Take what happened during Chinese New Year 2014. WeChat, China's most popular messaging app and social network, launched a campaign designed to promote its new payment platform. The then almost-400 million WeChat users were able to send 40 million digital hongbao (traditional red envelopes containing cash gifts) to friends and family through the app in 10 days. This year, 1 billion hongbao transactions took place on Chinese New Year's Eve alone. A fierce battle for mobile payment in China has begun.
WeChat's target is China's entrenched digital payment platform, Alipay. Alipay launched in 2004 on desktop and sat neatly within Alibaba's enormous digital ecosystem that includes the ecommerce titans Taobao and Tmall. Alipay's digital wallet currently boasts over 350 million users, and makes up around 80% of China's mobile payment market.
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