China's rapid urbanization is causing a payments technology gap between the city and country, leading the government to issue a plan to bring digital payments in small towns and rural areas, a move that should also boost volume for Ant and Tencent's payments businesses.
The government's stated goal is to make digital commerce such as mobile payments ubiquitous by 2020 and increase adoption in agriculture, according to a web translation of a Chinese government announcement.
Tencent Holdings Ltd.'s WeChat application is displayed on an Apple Inc. iPhone in this arranged photograph in Tokyo, Japan, on Friday, Dec. 28, 2012. Tencent, founded in Shenzhen in 1998 with an instant-messaging service called QQ, started its QQ Game Portal in 2003. For the past decade, online games such as "Dungeon & Fighter" and "Cross Fire" propelled Tencent's growth and contributed 56 percent of revenue in 2011. Now, casual gaming on smartphones and tablets is eating into the growth of gaming on PCs. Photographer: Tomohiro Ohsumi/Bloomberg
Tomohiro Ohsumi/Bloomberg
The move also provides new consumers for Chinese digital payment companies such as Alipay and Tencent Holdings’ WeChat Pay. Both companies have sought to continue their massive digital payments growth by pursuing Chinese tourists and expansion to other countries in Asia, Europe and North America.
Alipay has more than 700 million active users in China and an additional 200 million users overseas according to the China Daily. More than 40 million retailers support Alipay’s QR code-based payment service. WeChat announced that its messaging app had reached 1 billion global active users in 2018 (also reported in English by ZDNet).
China's Central Bank, the Banking and Insurance Regulatory Commission, the Securities Regulatory Commission, the Ministry of Finance and the Ministry of Agriculture and Rural Affairs have formed a plan that calls on rural officials to ramp up internet penetration, the digitization of public services provided to rural customers, enablement of digital sales of rural produce to city consumers and other measures.
According to the World Bank, in 2017 42 percent of China’s population lived in its rural villages and countryside compared to almost 84 percent in 1960. In 2017 only 8.46 percent of Japanese and just under 18 percent of Americans lived in rural villages.
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