(Yicai Global) April 19 -- China, which was the first country to introduce paper money, is set to beat the West to become the world’s first cash-free society, said Platinum Asset Management Ltd.’s [ASX:PTM] Chief Information Officer Andrew Clifford.
Mobile payments in Chinese society are “once again an interesting example of how China has bypassed the developed world’s approach and may well be moving to a cashless system faster than the West,” Clifford said in a note to shareholders after his recent visit to the country.
Alipay, Alibaba Group Holding Ltd.’s [NYSE:BABA] payment platform, has become the ‘essential way’ of settling transactions in China, which lacks a “deep network of credit card and EFTPOS [electronic funds transfer at point of sale] terminals,” Clifford’s note said.
Alipay does not make money form transaction fees. Instead, it sells credit rating data to third parties including managed funds and insurers, Clifford said. It has become popular among Chinese consumers, street vendors, cab drivers, and retailers because it does not charge the fees that are common in the US and Europe.
A rapid shift in consumer behavior has made China the largest mobile payment market in the world today, and transactions tripled to CNY38 trillion (USD7.2 trillion) last year, consulting firm iResearch figures show.
China’s mobile payment market’s growth rate has put the country on track to transform into the first cash-free society and other developed regions will likely look to replicate its model.