A new UN study 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 data shows that digital payments using existing platforms and networks provide access to a wider range of digital financial services, expanding financial inclusion and economic opportunity throughout China and neighbouring countries.
"Social networks and ecommerce 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 on these channels, bringing millions of people into the economy. This matters because we know that when people – especially women – gain access to financial services, they are able to save, build assets, weather financial shocks, and have a better chance to improve their lives."
"Widening access to financial services has always been at the heart of Ant Financial's mission and we are proud to have empowered more people to save, invest and gain access to capital," says Eric Jing, CEO of
Ant Financial Services Group, which operates Alipay.
Key findings from the reportMore people have opportunities to save and invest. Platforms such as Alibaba's Yu'e bao make investing money into diverse sets of financial products more accessible for low-income populations. This product allows them to invest the money left on digital accounts, leading incrementally to long-term savings. From 2013 to 2016, Yu'e bao has grown to manage US$117 billion and is now serving over 152 million customers.
Digital finance helps dramatically increase access to capital for small merchants. As of September 2016, a total of RMB 740 billion (US$107.3 billion) had been lent on the Alipay platform to over 4.11 million small and micro enterprises and entrepreneurs.
Big data generated through these platforms helps to build credit-scoring history and boosted access to credit, particularly for low-income financially-excluded populations. For example, Sesame Credit offers an alternative creditworthiness assessment by examining the credit history, financial behavior, contractual capacity, identity, and social networks of users.
The study also found both Alipay and WeChat are expanding beyond China and investing in major fintech and payments providers. They are joined by other major communication platforms, utilizing existing social networks and e-commerce platforms to drive digital payments and financial inclusion.
In India, both Ant Financial and
Tencent have bought into the Indian mobile payments market, which is enjoying rapid growth under new regulations. Ant Financial and Alibaba invested up to $900 million in Paytm, as well as sharing staff and technical expertise. The result: Paytm has grown from 5 million to around 200 million users in just the last few years.
The new report by the UN-based, Better Than Cash Alliance titled, Social Networks, E-Commerce Platforms and the Growth of Digital Payment Ecosystems in China – What It Means for Other Countries, contains key lessons to help other countries include more people in the economy by transitioning from cash to digital payments. This shift could increase GDP across developing economies by 6 percent by 2025, adding US$3.7 trillion and 95 million jobs, according to a McKinsey Global Institute report.
