China’s mobile payments to see rebound as offline vendors reopen after coronavirus lockdowns
- Offline scan-to-pay transactions have grown 15 fold over the past three years, reaching US$1.3 trillion in the fourth quarter of last year
- Offline merchants have been the major driver in China’s mobile payments boom because almost all accept QR codes or face scans to process payments
Home quarantine policies to curb the spread of Covid-19 in China have been a boon for most digital services, including remote work apps, e-learning and mobile gaming, but one online technology has not fared so well: mobile payments.
The problem started during Chinese Lunar New Year holiday in January, when most Chinese stayed at home after coronavirus lockdowns were imposed across the country. That hit mobile payments hard because shopping malls, stores and restaurants – which account for the bulk of transactions through Tencent’s WeChat Pay and Alibaba’s Alipay – were closed or had to severely curtail their business, according to a study by market research firm iResearch.
“When people cut their offline consumption during the virus [outbreak], the mobile payment business was hurt,” said iResearch analyst Zhang Yu. “But it will rebound in the second quarter when stores start to reopen and people go back to work.”
Tencent Holdings said that WeChat payment activity dropped sharply during the Lunar New Year holiday amid the outbreak of the pandemic but rebounded in the following week.
“We have seen a recovery in March … supply is coming back although there is still some suppression of demand,” James Mitchell, Tencent’s chief strategy officer, said on a company earnings call last month.
Offline businesses have been the major driver in China’s mobile payments boom because almost all bricks-and-mortar merchants in the country accept QR code scans or face scans to process payments, leading the push towards a cashless society.
