Payments on messaging and e-commerce platforms set to increase China's GDP by $236 billion by 2025, unlocking new economic opportunities for people and small businesses
BEIJING and NEW YORK, April 19, 2017 /PRNewswire/ -- A new UN study [https://www.betterthancash.org/tools-research/case-studies/social-networks-ecommerce-platforms-and-the-growth-of-digital-payment-ecosystems-in-china] reveals that Alipay and WeChat Pay enabled US$2.9 trillion in Chinese digital payments in 2016, representing a 20-fold increase in the past four years. The data shows that digital payments, using existing platforms and networks, provide access to a wider range of digital financial services, expanding financial inclusion and economic opportunity throughout China and neighboring countries.
The new report by the UN-based Better Than Cash Alliance [http://www.betterthancash.org/], Social Networks, E-Commerce Platforms and the Growth of Digital Payment Ecosystems in China - What It Means for Other Countries, contains key lessons to help other countries include more people in the economy by transitioning from cash to digital payments. This shift could increase GDP across developing economies by 6 percent by 2025, adding US$3.7 trillion and 95 million jobs, according to a McKinsey Global Institute report [http://www.mckinsey.com/global-themes/employment-and-growth/how-digital-finance-could-boost-growth-in-emerging-economies].
"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. "In China digital payments are thriving from these channels, bringing millions of people into the economy. 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."
"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. There is a quiet revolution underway and we know, firsthand, that our services are making a real difference to hundreds of millions of consumers. But, as this groundbreaking UN report highlights, 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," says Eric Jing, CEO of Ant Financial Services Group, which operates Alipay.
Key findings from the report:
-- More people have opportunities to save and invest. Platforms such as
Alibaba's Yu'e bao make investing money into diverse sets of financial
products more accessible for low-income populations. This product allows
them to invest the money left on digital accounts, leading incrementally
to long-term savings. From 2013 to 2016, Yu'e bao has grown to manage
US$117 billion and is now serving over 152 million customers.
-- Digital finance helps dramatically increase access to capital for small
merchants. As of September 2016, a total of RMB 740 billion (US$107.3
billion) had been lent on the Alipay platform to over 4.11 million small
and micro enterprises and entrepreneurs.
-- Big data generated through these platforms helps to build credit-scoring
history and boosted access to credit, particularly for low-income
financially-excluded populations. For example, Sesame Credit offers an
alternative creditworthiness assessment by examining the credit history,
financial behavior, contractual capacity, identity, and social networks
The study also found both Alipay and WeChat are expanding beyond China and investing in major fintech and payments providers. They are joined by other major communication platforms, utilizing existing social networks and e-commerce platforms to drive digital payments and financial inclusion. The report found opportunities especially strong in countries with a high smartphone uptake and collaboration between the private and public sectors:
-- In South Africa, 78 percent of all internet traffic takes place over
mobile channels - one of the highest rates in the world. However,
despite the continued growth of adoption rates, only 15 percent of South
Africans reported making a purchase on a mobile phone in the preceding
month when surveyed in 2016.
-- In India, both Ant Financial and Tencent have bought into the Indian
mobile payments market, which is enjoying rapid growth under new
regulation. Ant Financial and Alibaba invested up to $900 million in
PayTM, as well as sharing staff and technical expertise. The result:
PayTM has grown from 5 million to around 200 million users in just the
last few years.
-- Indonesia was the fastest-growing m-commerce market in the world in
2016, expanding 155 percent from January 2016 to January 2017. Some of
this growth may be due to the release in 2015 of BBM Pay's Instant
Mobile Payments. The popular BBM chat app has over 55 million users in
Indonesia and continues to develop.
-- In South America, markets have the infrastructure necessary to build
payment ecosystems similar to those seen in China. Fifty-nine percent of
the South American population uses social media, and 52 percent connect
with social media over their mobile phone. Yet the digital payments
space remains fractured, and no payments provider has linked their
service to these platforms in a significant way, or vice versa.
If you would like to learn more, the Better Than Cash Alliance has experts available to comment on the study.
Angela Corbalan, Head of Communications, email@example.com [mailto:firstname.lastname@example.org], (+1) 917 224 9109
The Better Than Cash Alliance is a global partnership of governments, companies, and international organizations that accelerate the transition from cash to digital payments in order to reduce poverty and drive inclusive growth.
The United Nations Capital Development Fund (UNCDF) serves as the secretariat.
To learn more, visit www.betterthancash.org [http://www.betterthancash.org/], follow @BetterThan_Cash [https://twitter.com/BetterThan_Cash].
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Better Than Cash Alliance
Web site: http://www.betterthancash.org/