Online Payment in China

Over twenty years after the first credit card was launched in China, and six years since the Chinese banks were unified in under a nationwide network, online payments is finally starting to catch on in China. Home to what are already one of the largest online populations in the world, at over 220 million users, China is a market ripe with potential for online payment services, but for those interested in entering the market, a number of unique challenges remain.

In this report, we highlight the potential for online payment in China as well as the potential pitfalls and challenges that you will encounter. We also examine the brief history of, the current state of, and the future development of online payments in China. Lastly, we have also identified and profiled the key Chinese companies to look out for in the market today.

Key Findings

• How important is the role of cash and prepaid payments in China today?

• What is the role of credit cards for online payment development in China?
• Which online payment models will become widely accepted in China?
• What is the regulatory environment for online payment in China?
• Which companies are leading the way in China's online payment sector?
• hat are the strengths and weaknesses of the major online payment companies in China?
• Are online payment companies in China making money?
• What are the challenges and risks for online payment companies in China?
• What opportunities are available for market entry and growth?
• Is there a potential "China Paypal" in the market today?

Figures

Figure 1: China's Late Start: Banking and e-Commerce Milestones, 1950-2008
Figure 2: Internet Users in China, 2001-2007 (M)
Figure 3: Bank Cards in Circulation in China, 2002-2007 (M)
Figure 4: Credit Cards Circulating in China and in the US, 2007 (M)
Figure 5: ATMs in China and US 2005-2007, (per 1 Million People)
Figure 6: ICBC Online Payment Password Card
Figure 7: China Government Groups Involved in Third-party Payment Regulation
Figure 8: Alipay and China Post Cash Remittance Form
Figure 9: China Mobile Prepaid Card
Figure 10: Alipay Transaction Volume Breakdown (%)
Figure 11: Tenpay Transaction Volume Breakdown (%)
Figure 12: China Online User Income Distribution, 2007 (RMB per Month)
Figure 13: China's Online Payment Registered Users, 2003-2007 (M)
Figure 14: Third-party Payment Provider Registered User Breakdown, 2007 (M)
Figure 15: Merchant Partners, 2007 by Tier (%)
Figure 16: Different types of Bankcards in China
Figure 17: Shenzhen Development Bank Credit Cards
Figure 18: Co-branded Debit Cards: Alipay Dragon Card and Taobao Green Card
Figure 19: China Online Payment Company Headquarters
Figure 20: China Online Payment Provider Bank Partners
Figure 21: China Online Payment Provider Foreign Credit Card Partners
Figure 22: China Online Payment Provider Key Domestic Credit Card Partners
Figure 23: Multiple Payment Channels for China Payment Companies

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