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Payment Preferences - China - November 2014
Introduction
 
‘The mobile and online payments market is still very young, but more people will quickly latch on to the convenience of mobile payment systems, and overcome current reticence. This will create a challenge for leading retail banks, but opportunities for online payment service providers, although this is already becoming a crowded market.

Consumers still need more convincing about convenience and security, and existing customers are prone to lapses in usage or to flit to competitor services. To retain customers, service providers need to communicate better with customers. They also need to provide more incentives for consumers and merchants alike to use their service, creating greater demand on both sides.

Alipay has come to dominate the market, and other providers need to focus on providing niche services adapted to niche consumer groups, to create a core base of loyal customers, from which to offer wider services to a bigger audience. But, the market is changing fast, and all those involved will have to adapt fast and remain innovative and responsive to changing market dynamics and consumer needs.’
-Matthew Crabbe, Director of Research, Asia-Pacific

Definition
This report covers four major payment methods. Namely,

●	Cash
●	Card – including debit card, credit card, gift card and repaid card
●	Online payment – either via online banking or via a third-party payment account, such as Alipay
●	Mobile payment – payment made via mobile phone or tablets

Related to these payment types, different ways of authentication will be mentioned. To clarify, these are explained below:

Rapid payment (快捷支付) – refers to a simple authentication process when making online payments. A dynamic password (ie one-time password) will be sent to the payer’s mobile phone to authenticate the payment provided that the mobile phone number is verified by the payer’s bank account. 

Card payment (卡通支付) – refers to the procedure of binding bank account information with a third-party payment account to proceed with online payment. This saves the payer from applying for traditional online banking.

NFC mobile wallet – refers to having Near Field Communications (a contactless, wifi-style technology) embedded in the payer’s smartphone (usually through a safety chip which contains bank card details). Users can just tap the phone on a contactless payment terminal to complete the payment process. NFC in Chinese would be called 近场支付

Report structure
The report features the following sections:

●	Executive Summary – a summary of the most important findings in this report
●	Issues and Insights – the analyst’s pick of key issues impacting the future market development and opportunities for players in the market
●	Trend Applications – a discussion of relevant consumer trends and their business applications 
●	Recent Developments in Payments– focusing on the recent developments in the market and what key players are doing
●	The Consumer – a detailed analysis of consumer data based on each research question surveyed for this report
●	Appendix – contains full data breakdown by demographics

Methodology
This is a marketing intelligence report published by Mintel. The consumer research exclusively commissioned for this report was conducted by a Chinese licensed market survey agent (see Research Methodology China for more information).

For the purposes of this report, Mintel commissioned a quantitative research survey carried out online to explore consumer usage of and attitudes towards different payments.

Fieldwork was conducted in August 2014, in four tier one cities and six tier two and three cities of 3,000 adults aged 20-49. The tier one cities are Beijing, Shanghai, Guangzhou, and Chengdu. The tier two and three cities are Tianjin, Tangshan, Wuxi, Wenzhou, Shenzhen and Nanchang. 

Unless otherwise stated, photographs in this report were taken by Mintel analysts.

Abbreviations
APR | Augmented Ray Reality
CAGR | Compound Annual Growth Rate
CNNIC | China Internet Network Information Centre
ICBC | Industrial and Commercial Bank of China
IC card | Integrated circuit card
NFC | Near Field Communication
PBoC | People’s Bank of China
QR | Quick Response

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