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Why China’s Mobile Payments Market Is Attracting Major Players

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Apr. 1 2016, Published 3:16 p.m. ET

Huge potential for growth

As seen in the earlier part of this series, China’s (FXI) mobile payments market is attracting heavyweights with both domestic and international players eyeing penetration in the country. Korea’s (EWY) Samsung Electronics (SSNLF) is planning to launch Samsung Pay in China and Hong Kong. The company stated that it is looking to enter China and roll out services in early 2016.

Leading technology companies like Apple (AAPL) will look to increase their shares in China’s mobile payments market in the next few years. According to iResearch, China’s mobile payment transactions stood at $373.2 billion, or 2.4 trillion yuan, in 3Q15, a 64% increase YoY (year-over-year).

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Market expected to reach 18 trillion yuan by 2018

China has approximately 620 million mobile Internet users. According to China Internet Network Information Center, the number of customers using the mobile payment system in China has increased by over 60% YoY (year-over-year) to 357 million. According to a report from iResearch China, China’s third-party mobile payments GMV (gross merchandise volume) could grow from 6.0 trillion yuan in 2014 to 18.3 trillion yuan in 2018, which is a healthy compound annual growth rate of 32%.

There has also been an increase in the number of smartphone users in China who use Alibaba’s (BABA) mobile payment services, Alipay, for on-demand services including the purchase of movie tickets, bill payments, as well as investing in financial services.

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