Mobile and online banking experienced a great surge in China thanks to government policies discouraging the use of cash and the expansion of e-commerce. Mobile transactions are the cheapest way to move money: their cost correspond to the 2% of banking costs, 10% of ATM costs and 50% of internet banking costs; new players in the field would be therefore desirable (IFAD, 2013). Ken Research (2014) published a report saying that Chinese money transfer market will grow at a compounded average growth rate close
to 7.4% thanks to higher acceptance rate of online transfers. The mobile payment market size has significantly expanded in the last years; the biggest Chinese players in the mobile payment sector are Alipay, Lakala, Union Pay and Tenpay. Online money transfers have increased as well thanks to the extension of Internet penetration and to the lower charges with respect to money transfers through banks’ branches. Since the mobile banking market has just taken off, companies definitely have many growth opportunities; financial institutions, operators, and Third-Party Payment providers have been exploiting the market (To and Lai, 2014). A Deloitte research reports the statistics of the
Share of global Smartphone shipments
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Ministry of Industry and Information Technology of China saying that, in March 2012, the number of mobile subscribers in China was already over 1 billion, corresponding to “three [times] the mobile base in North America and [more] than the entire mobile subscriber in Europe”. The main concern is that 3G services have slowly spread, so there might be technological gap to fill; however, the government sought to increase the number of 3G users through its policies contained in the 12th Five-Year Plan for National Economic and Social Development of China (Deloitte Consulting, 2012).
First of all, mobile companies could involve the poorest segment of population living in rural areas where banks have never operated or have closed their branches; mobile phones are instead more easily accessible and would constitute a great alternative to banks. Since a considerable portion of the Chinese population is not educated, another important factor to take into account is the ease of use of these services. In addition, mobile operators could concentrate in presenting themselves as reliable. I previously mentioned that trust is a greatly important factor in the Chinese culture; putting more efforts in increasing their trustworthiness would definitely attract more customers. Chinese people feel particularly exposed to technology risk (i.e. the risk that users choose unconfident technologies), information loss, and attacks (e.g. denial of service and malware) (To and Lai, 2014). China is indeed culturally different from Western countries, so both financial institutions and mobile operators willing to launch mobile or online payment networks must take into consideration its features. New technologies may be largely perceived as unsafe and risky because the Chinese are particularly risk-averse and reluctant to changes; in addition, a large part of the population lacks computer and mobile phone skills. The collectivist behavior may affect the willingness to adopt to technological changes by whole groups of individuals. Hence, before introducing new systems, banks and operators should try to increase consumers’ awareness and acceptance of new technologies and promote them as secure and reliable (Laforet and Li, 2005).
The 12th Five-Year Plan includes instructions to “actively develop e-commerce, improve e- commerce services for small and medium enterprises (SMEs), and promote the building of credit service, online payment, logistics and other supporting services for the public” (To and Lai, 2014). On the other hand, the Bank of China fears that the booming acceptance of mobile payments such as WeChat and Alipay will threaten the conventional banking system by taking business away from it. It has therefore started drafting policies setting a threshold on the amount of money that can be spent through mobile payment apps (Fin Tech, 2014).
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Many Cross-border Payment Services have been launched in the last years. Alipay is probably the most famous one, but the same services are offered by Tenpay. PayEase provides SMS mobile payments, Internet banking, and point-of-sale (POS) terminals by supporting more than 60 kinds of credit and debit cards. AsiaPay offers payment services in 12 Asian countries (China included) via credit and debit cards issued by Visa, MasterCard, American Express, JCB, China UnionPay and others. NTT Com Asia provides e-Commerce and m-commerce through its platform for domestic and cross-border transactions in many currencies. Red Dot Payment allows payments with Visa, MasterCard and China UnionPay, but also with Alipay, Tenpay, and 99Bill. MOLPay offers payments with cards in more than 170 currencies but also national online banking for many Asian Pacific Caribbean banks and cash payments in different kinds of stores (Jiang, 2016).
In the next chapter, I will briefly analyze the Chinese Anti-Money laundering regulation as well as the Italian regulation and remittance market, as well as the specific regulation for Money Transfer Companies. I will then report data about the remittances outflows from Italy to China, which are huge with respect to those to other countries, and have been decreasing after the last investigations by Italian authorities. The detections have indeed revealed that money transfers to China are so high because most of money derives from illicit activities, especially from fake invoicing and the sale of counterfeited goods. My empirical analysis will demonstrate these facts, and the comparison with the Pakistani and the Moroccan community in Italy will further confirm the results.
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