A private-sector study found that annual transactions in mobile payments in China reach 178 trillion yuan ($25.1 trillion) with payments ranging from food stall meals, car payments, and even medical services.
Internet giants Alibaba and Tencent Holdings, with each having about 1 billion users of their payment platforms, is responsible for 90% of the mainland's mobile transactions making them major influencers in this new financial structure.
Even at the First People's Hospital of Yuhang, home to e-commerce leader Alibaba, the hospital's facial recognition system is an offshoot of Alipay, the online payment platform of Alibaba.
The hospital is using this technology to book doctor appointments and even pay for care.
Quickly done in 30 seconds on the phone, everything from insurance cards and smartphone payments all gets taken automatically.
With a camera authenticating patients in every examination room, results get automatically stored and Alipay engages in financial transactions with banks to process the payments hi-tech style.
Such a system also makes it easy for the patients to leave immediately after getting medicines from the pharmacy.
Because of such convenience, Alibaba also thought about patients getting diagnosed through the same artificial intelligence (AI).
By July of this year, Alibaba has helped developed an AI that can detect heart disease.
The vast amount of data stored by AI through mobile payments paves the way for new businesses as well.
One good example is when you tap several times Alipay's app, you'll get redirected to a Huabei, a small-lot loan service operated by a company that also belongs to Alibaba.
AI calculates the loan limits and interest rates while doing a background check of information of the sites visited online including any outstanding bills of the potential borrower.
Huabei also sets the credit lines and lets customers pay after using the credit.
Alipay then bundles these loans into tranches, each valued at 2 billion yuan to 3 billion yuan, and sells them to investors to recover funds.
Data as of June 2017 show that there are only 0.47% of nonperforming AI-based loans compared to commercial banks' 1.8%.
Though Alibaba and Tencent guard closely personal information gathered using their mobile payment platforms, to even lower the risk, China required all smartphone payments since 2018 to go through a system affiliated with its central bank.
Because of user-friendliness and economic benefits, the Chinese are tolerant of the new way of paying using AI.
Hu Mingqiang, 28, bought a Volkswagen Lavida compact sedan by making a down payment of 60,000 yuan through Alipay.
He only used cash to pay for a 5-yuan beverage and a 20-yuan parking fee.
In fact, in a Nikkei survey, only one person mentioned paying in cash.
