Alipay and WeChat near $3 trillion payments milestone

Alipay and WeChat near $3 trillion payments milestone

A new study by the UN-based Better Than Cash Alliance reveals that Alipay and WeChat Pay enabled $2.9 trillion in Chinese digital payments in 2016, representing a 20-fold increase in the past four years.

The Alliance believes the shift in payments to popular social platforms in China contains key lessons to help other countries include more people in the economy by transitioning from cash to digital payments.

“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.”

Big data generated through these platforms helps to build credit-scoring history and boost access to credit, particularly for low-income financially-excluded populations, she says, pointing to Alibaba's Sesame Credit as an example. Subverting traditional credit scoring techniques, Sesame Credit offers an alternative creditworthiness assessment by examining the credit history, financial behavior, contractual capacity, identity, and social networks of users.

Between them, AliPay and WeChat command a 63% market share in digital payments across China and are using their experiences to drive into other aspects of financial services and into new geographies. While emerging markets in South East Asia are a key target, the tech behemoths have also set their sights on expanding into mature European and American economies, posing a threat to territory traditionally policed by major financial institutions.

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