In 2015, estimates for the number of China’s mobile Internet users exceeded 620 million, including 358 million users who paid for items via mobile devices. Mobile payment is quickly becoming the most common means of payment after cash, and debit and credit cards.

This trend came to mind recently while I was at my local bakery in Beijing. I had forgotten to bring my wallet and only realized this when I was already at the cashier. Fortunately, she gave me an online payment option, and helped me open the app on my cellphone. After she scanned a barcode into the app, my payment transaction was promptly logged. She even gave me a small discount for using the app—something the app company subsidizes in order to encourage more users.


Maybe things are changing even faster in China than I realized, I thought. Credit card usage is already quite prevalent but could I actually get by without any cash in the country’s capital city? I decided to conduct a month-long experiment to see.

My favorite neighborhood restaurant is a 10-square-meter small eatery that sells river snail rice noodles, a specialty of Guangxi province, which borders Vietnam. The restaurant walls inside are covered in graffiti left by customers and to place your order, you are given an iPad to select your meal. I chose my favorite style of noodles with an extra vegetable topping and two extra pieces of fish cake. “Can I pay with my mobile phone?” I asked.

“Yes, of course,” was the response I got. “And you are very welcome to become a restaurant member.” The staff helped me open the phone app, search for the restaurant’s account name and pay the less than US$5 for my meal. With the initial set up done, I could also save time by ordering from home and then just stopping in to pick up my order.

There are more than 30 restaurants, bakeries and cafés in my neighborhood, and to my surprise, nearly all of them now accept payment via one of two of the most popular online payment apps.

Some even offered discounts when using some of the apps in which reviews can be shared. So for the 30 days of my experiment, I bought clothes, air filters and food online. I bought train tickets and travel insurance for my parents through mobile apps. I donated to a young rural leukemia patient on a crowdfunding platform—all of which was paid for through online payment apps. I even persuaded my housekeeper to open a payment account so I could pay her that way.

I used Uber-like car services, which of course were automatically paid through my mobile phone. Surprisingly, even small street vendors are catching on since I was able to buy a pack of “sugar fried chestnuts” from one of them with my phone for about US$2.

There are some shops in my neighborhood that do not accept mobile payment, including the dental clinic, the 7-11 convenience store, and a gym. And I was also not able to use those apps on U.S.-based travel websites to book hotel accommodations abroad for the Chinese New Year holiday—although of course I did not use cash either.

So after 30 days can you guess how much I spent in cash? My total cash expenditure was 40 yuan or the equivalent of about US$6—for parking. Perhaps the parking meter attendant will soon take a mobile payment app but I have yet to ask.

Julia Zhu
Consultant to Matthews Asia

As of February 26, 2016, accounts managed by Matthews Asia did not hold positions in Uber, Inc.

The subject matter contained herein has been derived from several sources believed to be reliable and accurate at the time of compilation, but no representation or warranty (express or implied) is made as to the accuracy or completeness of any of this information. Matthews International Capital Management, LLC does not accept any liability for losses either direct or consequential caused by the use of this information. Investing in small- and mid-size companies is more risky than investing in large companies as they may be more volatile and less liquid than large companies.

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