Retail payment behaviour and the adoption of innovative payments: A comparative study in China and Germany

Abstract

The emergence of the internet and e-commerce in the late 1990s and early 2000s brought new challenges to payment markets. While China’s payment markets became dominated by large non-bank platforms like Alipay and WeChat, payment markets in Germany continued to be dominated by banks in the form of legacy payment systems such as credit transfers, direct debits and — for point-of-sale payments — the bank-owned girocard debit card scheme, in addition to cash. Based on a sample of retailers in three metropolitan areas of China, this paper finds the combined market shares of Alipay and WeChat fall in the region of 55–65 per cent in various payment scenarios, both at the point-of-sale and online, thus confirming the dominance of non-bank payment service providers in these areas. In Germany, by contrast, comparable mobile payment methods have not been adopted on a broad scale. Based on empirical evidence, the paper identifies drivers and challenges of innovative mobile payment methods in the examples of China and Germany.