Alipay Digital Wallet: China’s Fintech Development and the Transition towards a Cashless Society

Abstract

With the rapid increase in China’s internet penetration at present, e-commerce has been largely integrated into modern Chinese daily lives. This research selected Alipay digital wallet; the most prevalence of online payment system in China, as a case study to explore the formation of digital culture in using digital wallets as an alternative to cash in Chinese society. The finding of this research indicated that, Alipay digital wallet is most prevalence within urban areas due to 1) Alipay digital wallet has various services range from online payment, wealth management assistant, book medical appointment to view post-consultation medical reports which signify modern urban lifestyle. 2) Alipay employs a business ecosystem strategy to create a wide variety of merchant network in the domestic and international market. Additionally, by leveraging its large customer database, Alipay can analyze consumers’ behavior and cater future service accordingly. 3) The important factors such as urbanization, the rise of middle-class consumers, rapid change in digital natives’ behavior and government supported policies are facilitating the prevalence of Alipay digital wallet and transforming China into a cashless society.