Retailers to benefit from widespread adoption of mobile payments and online ecosystem

Retailers should consider security risks when developing e-commerce strategy

Hong Kong, 10 Nov 2016 - Chinese online retail sales in the first three quarters has reached 3,465.1 billion yuan, a 26.1% YoY growth, of which, online retail sales of physical goods valued 2,795.0 billion yuan, an increase of 25.1%. The figure reflects the popularity of mobile payments continues to grow rapidly, which is in line with the PwC's annual global survey, Total Retail 2016: They Say They Want a Revolution. It reveals that nearly one-third of Chinese respondents prefer making mobile payments. However, there are also growing concerns about security issues become more pressing.

According to the Total Retail report, in 2015, almost one-third of Chinese respondents said they preferred to make mobile payments, which doubled the number in 2014. By comparison in 2015, 12% of respondents worldwide stated a preference for making mobile payments when shopping online, a figure four times higher than the previous year (2014:3%).

The rise in prominence of mobile payments for both online and offline markets comes as a consequence of a range of factors that include explosive growth of mobile payment scenarios, more convenient mobile payment methods and development of mobile network technology, as well as e-commerce.

The rapid evolution of mobile payment technology is a driving force for the development of payments. For consumers in China, the ensuing diversity in mobile payment technologies is leading to a proliferation of benefits such as access to faster payment services with more security than ever before.

A range of technologies underpin the rise of mobile payments. Near Field Communication (NFC) and QR code payment methods are already widely employed, while more options are coming on line with cloud payment technologies, Magnetic Secure Transmission (MST) and payments via Wearables. 

Concurrently, efforts to integrate payment options with biometric technology, such as fingerprints and facial recognition are also emerging. 

Yuqing Guo, PwC China PwC Financial Service Consulting Partner and leader of the Experience Centre in Shanghai, noted "as market competition intensifies, we see that technology continuously changes the way consumers' access and purchase products. Mobile payment players are attracting users with strong appetite for innovative technologies and business models designed to seize access to mobile payments and monetize data of user habits." 

However, the rise of mobile payment poses growing security risks. The three biggest threats relate to a leak of user information, payment fraud and virus attacks. 

PwC's Total Retail survey results reflect the growing concern of potential risks by mobile phone users. The report shows that over 60% of respondents are worried that hackers may gain access to their personal information as a result of vulnerabilities associated with mobile phone use.

The Chinese government have taken steps to safeguard the industry by introducing password verification, fingerprint identification as well as technologies such as Payment Tokenization and establishment of a Trusted Execution Environment which are increasingly being applied to augment the security of mobile payments. 

Approaching November, retailers in Greater China are preparing for the traditional sales season, both online and physical stores, which will create huge business opportunities. "Various forms of promotional campaigns will spur spending and stimulate overall retail volume. This will benefit customers, shopping malls (both online and physical) and logistics companies, says PwC Asia Pacific and Hong Kong/China Retail & Consumer Leader Michael Cheng. "In order to win amongst competitors, it is necessary for retailers to create personalised offers and engaging experiences, in order to build customer loyalty, and achieve their goals during peak shopping seasons." 

Current developments in the market are in line with our estimations for China’s retail and consumer product industry, which foresee a compound annual growth rate of 7.5% between 2016 and 2020. "The future growth in the mobile payments sector will be spurred by surging smartphone use and spending by sophisticated online shoppers. The rise of millennial shoppers on smart payments bodes well for sales, particularly as technological advances make mobile payments more accessible, secure and cheaper. However, there is still scope for companies to improve security measures on payment and personal data in order to reduce risks and enhance brand trust with consumers," concludes Mr. Cheng. 


  1. Payment Tokenization is the process of replacing the bank card number with Token, a unique identification symbol, to avoid information leakage.
  2. Trusted Execution Environment (TEE) is an execution environment isolated from the operation system. Through separating general software from applications with high confidentiality, TEE provides security features.

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Tel: +[852] 2289 8912

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