Digital Ventures has discussed stories in China from different perspectives. This includes the ecosystem (read more at the Shanghai Ecosystem and Shenzhen Ecosystem) or the financial service (read more at the Peer-to-Peer Lending in China and WealthTech in China). Today, we will explore another issue that is no less interesting. It is about China’s social network that relates to the cashless society, an ultimate goal for the digital economy in many countries. China is known for its great success in the cashless society that uses the social network as a mechanism. Therefore, today, we will focus on the use of the social network to drive the cashless society in China.
Cashless society landscape in China
China greatly supports cashless payment that they have become a leader and ranks among the top countries who are moving closer to becoming a cashless society. The Renmin University of China reports that China’s cashless payment is facing a rising trend, both with credit cards and mobile applications. This is especially true with mobile applications as their transactions reached 900 billion times in 2016.
The great amount of mobile transactions derives from marketing strategies by cashless payment service providers who focus on daily use. The Renmin University of China explains that the different mode of payment for products and services are as follow:
- Retail. More than 60% of payment in retail stores are via mobile applications such as at convenient stores, supermarkets, and shopping malls.
- Entertainment services. From the survey, 70% of Chinese consumers use mobile applications to pay for cinema tickets.
- Traveling. As the Chinese population travel, over 60% of tourists remain to use mobile payments and other services such as taxis or hotel payments.
Social network and cashless society success
Chinese FinTech looks beyond a mode of payment, they see it as a way of life. This is why China chose to integrate the payment platform to applications surrounding everyday life such as social network, e-commerce, and other services. However, the social platforms provided the most effective outcome and contributed to the current widespread.
China’s leading payment gateway service providers such as Alibaba and Tencent have seamlessly integrated social network to their payment gateway and wallet. The main applications can be categorized as follow:
- Social Network Platform. Features of the social network include connectivity and clear user profile. Connectivity provides convenience for transactions both among users and with stores. User profiles are used for identity verification. It becomes a basic digital transaction that can conveniently and speedily be completed on the social network. In China, users can link their account for verification on the social network.
- Social Commerce Platform. China also has an e-commerce platform that focuses on consumer-to-consumer service. Here, users not only trade but can interact with chats and comments. This is social commerce that facilitates transactions among users by integrating the payment solution. This platform plays a significant role in promoting cashless payment.
As cashless payment joins with the social network, aside from helping the financial services to penetrate human daily lives, it also collects data that helps to develop other forms of services.
Cashless service stemming from social network
Integrating cashless payment and social network trigger new forms of financial services because of the connectivity, verification, and data collection on the platform. Some examples are as follow:
- Peer-to-peer Transfer. Social network unlocked numerous features, especially credible identity verification via profiles. This resulted in a peer-to-peer transfer that provided convenience in users’ lives such as small-amount lending and splitting bills among users before actual payment.
- Micro Credit for Lending. Social network and social commerce brought about user profiles from online posts, location check-in, and payments. As a result, service providers can assess credit scores before offering loans for cashless payments via their platform at around 500-50,000 RMB (about 2,500-250,000 THB). This amount is enough for daily usage while the interest rates are much lower than other sources.
These are examples of social network services that are convenient and attract more users to the cashless payment platform.
Undeniably, China interestingly applies the social network, that we normally use for data and entertainment, to financial services. Not only does this give users great experiences but is leading China into a cashless society and a healthy digital economy. Follow Digital Ventures for more financial updates.