(Yicai Global) March 27 -- The amount of Chinese mobile phone payments has exceeded Japan's GDP, driven by the robust expansion of mobile payment services of Tencent Holdings Ltd. [HKG:0700]. Smartphone payments in China doubled to more than JPY600 trillion (about USD5.44 trillion) in 2016, compared with the previous year, reported cn.nikkei.com today. For Chinese people, going out with neither wallets nor cash has gradually become a reality, with Tencent dominating the trend through new services.
The size of smartphone payments of users in China rocketed in 2016 to 50 times that of the US and surpassed Japan's GDP. Tencent's WeChat payment is also gaining momentum around the whole country. In Japan, which is welcoming a growing number of Chinese tourists, department and drug and cosmetic stores are following suit, too.
Now, finding a shop in China without access to mobile payment is almost hard task. China's population is basically free from the use of cash in daily life since the second half of 2016.
Tencent's WeChat has led the tide. WeChat has become an indispensable means for Chinese people to communicate with each other through its messaging service, boasting nearly 900 million active users every month. Over the past year or two, Tencent has managed to successfully attract such a giant user base to its mobile payment services.
The earlier leader of mobile payment in China was Alibaba Group Holdings Ltd. [NYSE:BABA], which expanded its user numbers by taking advantage of the "Alipay," mobile payment service of Alibaba Group's financial arm, Ant Financial Services Group, through its own e-commerce website.
However, Tencent, underpinned by nearly 900 million WeChat users, has been actively developing its smartphone payment services since 2016. With 'WeChat Payment' as the main driving force, it had gained 830 million paying customers by the end of September 2016, well ahead of Alipay which has only 400 million users.
However, in terms of total payment volumes, tencent is still lagging behind Alibaba as Alipay gives first priority to online shopping. Nevertheless, Alibaba witnessed a sharp decline in its market share from 79 percent in 2014 to 50 percent in 2015. Tencent, on the contrary, has gained 38 percent of the market share and is still catching up.