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Is China’s New Payment System the Future?
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Is China’s New Payment System the Future?

Aaron Klein
Brookings Institution, 2019
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When consumers pay for goods and services with credit cards, credit-card issuers make money on every transaction; “swipe fees” amount to $80 billion per year in the United States alone. Two new payment models from China could threaten those revenues – and oust banks as intermediaries – if those models gain traction in the West. In this intriguing report for financial services professionals and retail executives, economist Aaron Klein examines the explosive growth of the new payment platforms in China and assesses whether they could take hold in mature economies. 

Take-Aways

  • China’s approach to payments processing may cut out the role of banks as intermediaries.
  • The popularity of China’s payment models is a force with which other countries and their financial institutions will have to reckon.
  • The direct adoption of these alternatives in mature economies is unlikely.

About the Author

Aaron Klein is a fellow in economic studies at the Brookings Institution.

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