eCommerce Payments in China: Top Providers, Consumer Preferences for Alipay and WeChat

eCommerce Payments in China: Key Insights

• Top payment providers: In 2023, Alipay was the leading payment provider, offered by 71.8% of China’s eCommerce merchants. WeChat Pay is second, at 61.5%. Visa and Mastercard, highly popular in North American and European online markets, are much less used.

• Consumer preference: In 2024, 91% of Chinese consumers who used an online payment method chose Alipay, making it the top choice. It is followed by WeChat Pay, chosen by 86% of respondents. Union Pay ranks third, with a much lower share of 45%.

• Cash-to-wallet trend: A major shift away from hard cash to digital payment has taken place in China. But barriers exist, prompting state-level measures to curb the transition.

What’s in a digital wallet?

Digital version of cash, when the wallet is topped up. But also: the promise of convenience, security, and flexibility.

It’s not surprising that digital wallets are predicted to be the fastest growing payment method in global eCommerce—the CAGR (2023-2027) is 15%, according to GPR 2024. Worldwide, China is the leader in digital wallet use and is driving its spectacular rise.

We examine the top five payment providers in China’s eCommerce market and the evolution in Chinese consumers’ payment preferences before discussing whether the shift to cashless payment in China is here to stay.

What Are the Top Payment Providers in China’s eCommerce Market?

Our ECDB data reveals that China’s eCommerce industry, by and large, has forfeited cash in favor of electronic payment methods.

This includes both digital wallets and cards, which rank first to fourth in the list of top five payment providers. In comparison, traditional payment methods trail behind.

• Alipay is the leading payment provider in China’s eCommerce market, with 71.8% of online stores accepting payment through this eWallet in 2023.

• WeChat, also a mobile wallet, stands second. It is offered by 61.5% of eCommerce stores in China.

• Visa, accepted by 31.7% of online Chinese businesses, is third.

• Mastercard is close behind at the fourth position, offered by 30.9% online stores.

• Bank transfer/cash in advance ranks fifth. At 30.9%, it has similar acceptance rates as Mastercard.

Looking at the data, it becomes clear that preference for traditional payment – cash in advance and bank transfer – is low. Strengthening digitalization and proliferation of digital payment systems in China are behind the increasingly cashless choices for online purchases.

While still in use for eCommerce payments, Visa and Mastercard are preferred far less than local Chinese digital wallets. In contrast, these two cards are still dominant in the U.S. and Europe, as well as in Latin America, where their usage rates are well above 90%.

One thing to note is that that the lower usage rates for cards do not necessarily mean that consumers are discarding them entirely for wallets. It is possible for cards to be linked to digital wallets. So, while they may not be as highly used directly for eCommerce transactions, cards may still be under use through eWallets—that is, to top them up.

Consumer Preferences: Alipay & WeChat Pay Usage Skyrocketed Between 2018 and 2024

China’s transition to a cashless society is led by third-party payment providers – in particular, Alipay and WeChat.

According to Statista Consumer Survey 2024, over half of all Chinese respondents (52%) who conducted an online payment in the past year used digital payment services, which includes digital wallets like Alipay and WeChat.

In comparison, credit and debit card usage is between 37-39%. Preference for cash on delivery and advance is lower still, at 17-26%.

Have Alipay and WeChat always dominated China’s market? The usage rates of these wallets between 2018 and 2024 show their growth trajectory.

The top three online payment providers that Chinese consumers use today are the same as in 2018. However, in 2024, the usage rates and ranking of all three services have changed:

1. Alipay

In 2018, Alipay was used by 40% of Chinese consumers who had used any online payment method in the past year. At this time, Alipay was the second most used service in China, behind Union Pay and slightly ahead of WeChat Pay.

Its usage soared in the intervening years, which catapulted this digital wallet to the top of China’s digital payment landscape. In 2024, 92% of respondents report using Alipay, underscoring the central role it has come to play in consumer transactions.

Launched in 2004 by Alibaba Group, Alipay spearheaded the digital payment revolution in China. Today, it is one of the most popular payment platforms in the world. The app uses cutting-edge technology like QR codes and facial recognition to initiate payments. In February 2024, Alipay drew nearly 660 million Monthly Active Users (MAUs) in China.

2. WeChat Pay

86% of respondents chose WeChat Pay, making it the second-most preferred online payment service among Chinese consumers. This mobile wallet’s popularity has surged significantly since 2018, when it ranked third and was used by just 39% of respondents.

Developed by tech giant Tencent, WeChat Pay is part of the all-rounder messaging and social media app WeChat. The app has become an indispensable part of life in China, where it has a massive user base: 1.4 billion MAUs, as of March 2024. It is also used in other markets including Malaysia, India, and Russia.

WeChat’s widespread adoption facilitates the use of WeChat pay for eCommerce transactions and other purposes like bill payment, transportation, and tourism. WeChat Pay also provides cross-border payment service, meaning Chinese consumers can use it to pay foreign vendors in a variety of currencies for their cross-border purchases.

3. Union Pay

In 2024, state-owned Union Pay, also called China Union Pay (CUP), ranks third: 45% of survey respondents said that they used this online payment method in the last year.

In comparison, 42% of respondents who were using online payment methods chose Union Pay in 2018, when it ranked first in China. In six years, Union Pay’s usage climbed by only 3 percentage points. Its growth is dwarfed by the meteoric rise of Alipay and WeChat Pay.

Union Pay offers online as well as mobile payment solutions, but its focus is on card-based payment. It offers many types of cards including debit, credit, and prepaid cards. Recently, it has partnered with over 60 online merchants to facilitate online payment through Union Pay cards for multiple use cases including eCommerce, ride share, and travel.

China’s Payment Dilemma: To Go Cashless or Not?

From the last decade, China was on the path to becoming a cashless society, leading the world in digital payment adoption. This transition, occurring against the backdrop of rising internet and smartphone penetration, is a boost for eCommerce.  

The Chinese government played an instrumental role in promoting cash-free transactions. The regulatory environment for digital payment is supportive. A digital currency – the digital yuan or e-CNY – was also launched in 2019 to replace physical bank notes. Overall, this support was so successful that most businesses, from retail giants to street vendors, began to refuse cash payments.

But this move exposed problems accompanying the digital shift. The elderly demographic in China, with less technological literacy, still preferred paying in cash. Moreover, tourists and international traders who do not have Alipay or WeChat accounts struggled with making transactions, as they could not open accounts without extensive documentation.

To address the issue, the Chinese government recently fined several businesses that refused to accept cash. Alipay and WeChat also allowed overseas users to link their international cards to their digital wallets in 2023, in a bid to lower the barriers foreigners faced in China.

Such measures do not indicate that China is reverting to a cash-dominant economy, but they signal a slowdown in China’s complete shift to digital payments. The state’s renewed emphasis on cash acceptance shows that China is aiming for a comprehensive payment ecosystem. Digital wallets are projected to reign, but cash is unlikely to go out of the picture any time soon.

Sources: WorldPay - The Global Payments Report (GPR) 2024