Mobile payments catch on in China; PBoC developing own virtual currency

In recent years, China has become the global leader in mobile payments. The Chinese consulting firm iResearch Global estimates that about 450 million Chinese used mobile payments services last year. The apps of the largest mobile payments service providers (Alibaba's Alipay and Tencent's WeChat Pay) are now in such wide use in China's big cities that people can get through an entire day with only their phone. Mobile payments are now a standard option in restaurants, taxis, shops, cafes and parking fees. The shift of providers of investment services to mobile platforms has fuelled the growth of mobile payments. Many Chinese seem to be switching directly from cash to mobile payments without ever going through the intermediate step of acquiring a credit or debit card.

Various forms of virtual currency such as bitcoin are also popular in China. The PBoC has also been developing its own virtual currency for couple of years. The currency and its related payment systems are now in trial use in select banks in Shenzhen and Guiyang. China's central bank will probably become the first central bank in the world to issue its own virtual currency. A goal of China's virtual money is to increase efficiency of interbank payments and transparency, thus making banking supervision easier and financial crime more preventable. The PBoC's eagerness of release own virtual currency may also be motivated by the fact that virtual currencies can be used to circumvent China's capital controls. Lately, officials have significantly increased supervision and tightened regulations concerning virtual currency transactions.