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The objective of this article is to analyze the current market environment
of third-party online payment services in China. The findings and the analysis
presented in this article shall illustrate both the major challenges as
well as the huge growth potential facing third-party online payment services
in China.
The subjects under study are the service firms that offer third-party
online payment transactions to end users. The studied customers in this
article are individual consumers and small business owners who actively
shop online and make frequent payment transactions online. The market under
study is often considered the “C2C” (or “Consumer-To-Consumer”) market
by the industry. The research method and data used in this study originates
from two major sources: (i) from analyzing compiled data about the market
collected by established research centers and government statistics bureau;
and (ii) from actual field research conducted by the author at the headquarters
of Taobao, i.e., the parent company who operates the market leading Alipay
service in China. This article includes insights from discussions with
Alipay managers about their firm’s strategy and plan, current status of
the industry in China, and future outlook about the market as a whole.
Among the findings described in this study, the most important one is
that a wholesome online payment environment is the key to China’s online
business success. The outlook for this market in the near future is that
the online payment industry shall experience significant growth and expansion,
especially in areas where the new business model of online payment intersects
and interacts in interesting ways with traditional banking.
The author wishes to express her deepest gratitude to the Academy of Consumer Financial Services for providing support to this study.
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