China’s ‘Wild West’ May Be the Future of Peer-to-Peer Payments

Peer-to-peer lending may be growing steadily in the U.S., but it’s truly taken off in China. And that is providing opportunities for U.S. venture capitalists and other startups willing to stomach a volatile marketplace.

More than 2,300 services that allow consumers to get loans from individuals were operating in China at the end of 2014, estimates the Payment and Clearing Association of China. Many of the Chinese sites are fly-by-night operations—nearly 300 went out of business last year, the PCAC estimates.

But after just a few years in operation, these services have together originated more than $50 billion in loans. That dwarfs the $14 billion in the U.S. last year, according to estimates from peer-to-peer lending advocacy group Lend Academy. And that gulf is projected to widen in the coming years as Chinese companies continue to attract more awareness and funding.