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August 3, 2017

The Nature of Payments & E-Commerce: China vs Japan


China has the largest population in the world with over 1.3 billion people, and one of the fastest growing economies. This is due to its high productivity levels, the low cost of labour and the moderately developed infrastructure. It is the world’s leading manufacturer and exporter of goods. China’s political and economic reforms have brought about a large middle class and an urbanised population. Consequently, this has created many business opportunities for both local and international investors.

Financial Inclusion

79% of China’s population has access to banking services. These “big four” state owned commericial banks are the greatest competitors in China: Industrial and Commercial Bank of China, Bank of China, China Construction Bank and Agricultural Bank of China. Even with increased digital banking, credit card use is still relatively low in China as compared to the APAC region. China's Union Pay processes most of the country’s transactions.

E-Commerce Trends

16% of all sales in China occur via e-commerce, resulting in a billion dollar B2C e-commerce sector. E-commerce grew rapidly in the region between 2010 and 2014. Here are a few reasons behind the rapid growth of e-commerce in the region:

This trend is most prevalent in the rural areas due to the limited transport options.

Internet and Smartphone Penetration

Half of China’s population has internet access. The urban areas have embraced the internet more than the rural areas with 72% and 28% respectively. China is well known for manufacturing phones. According to research carried out in 2015, China was among the leading countries in smartphone penetration with 10% higher than the general world figure. 28% of the globes smartphone users are from China. However, the Chinese smartphone manufacturing market is slowly falling as a result of stiff competition from other Smartphone manufacturers.

How Shoppers Pay Online

The use of e-wallets is the most common form of online payments taking 48% of all transactions. Card based payments take 32% of transactions; bank transfers account for 10%, cash based payments are at 8% while other methods take up only 2% of all online payments. The most used e-wallets are Alipay with approximately four hundred million users and transactions worth billions of US dollars. Tenpay follows closely with roughly 300 million users. China's national bank card is widely used. It operates relatively 90% of the debit and credit cards in the region.  

Dogenzaka, Shibuya, Japan


Japan is the tenth most populous country in the world. It has a population of approximately 126 million people. Most people live in Tokyo, which is the capital city of Japan. It is among the world’s largest exporters of goods and is well known for its expertise in car making and electronics, with major brands like Panasonic and Toyota.

Financial Inclusion

97% of the people have access to banking services. This is due to its great economy. Credit card use is at an all-time high with the majority of citizens having credit cards. According to statistics, Japan is top of the list of countries with the largest number of credit card users in the world. Japan Credit Bureau is an international brand with 20% of its users being Japanese and the rest in 190 other countries.

Internet and Smartphone Penetration

Japan has the greatest internet penetration in Asia, with 51.8 people having access to internet services. It has a large base for online shoppers. Smartphone penetration in Japan is at just 49% , which is absurdly low given the level of internet penetration. This is because the older generation have a hard time getting used to smartphones, leaving only the younger generation using smartphones.

E-commerce Trends

Many Japanese people are online shoppers, and it is the world’s fourth largest e-commerce market. Japan has an average spend of 1885 US dollars per shopper. The B2C e-commerce sector was worth 70.2 billion US dollars in 2014. The most common market sites are Amazon Japan, Rakuten and Yahoo Japan which account for 50% of e-commerce revenue. Rakuten is the leading e-commerce market in Japan.

How People Pay Online

The most popular method of payment is the use of cards. Cards account for about 63% of all online transactions; bank transfers are at 15%, cash-based transactions 11% and use of e-wallets 15%. Benefits of using Pay-easy bank transfer system include:

Cash-based payments can be made at 50,000 convenience stores all over Japan.

Conclusion: A Comparison of Japan and China

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