Tencent has long hinted at European expansion for its mobile payment system, WeChat Pay, in an effort to compete with its rival, Alipay. The company announced today it has achieved a milestone in this endeavor through a partnership with German payments service Wirecard, which will give retailers in Europe the option to offer WeChat Pay to Chinese shoppers.
WeChat Pay is currently trailing just behind Alipay, which already has a presence in Europe, with 40 percent of China's mobile payments' market share at 600 million active users. As of March, Alipay had a market share of almost 55 percent. Offline retail has been a huge driver in WeChat Pay’s growth, as well as its social media ecosystem that inspires customers to shop within its platform. An increasing number of brands have been opening e-shops on WeChat, giving their followers the option of using WeChat Pay to purchase handbags and clothing without ever leaving the app.
While the move is a bid to boost Tencent's market share, it's also designed to benefit brands. Participating luxury retailers in Europe that are already using WeChat as a cross-border marketing platform for Chinese shoppers by adopting tools like geolocation services so that customers can easily find their store, will now have the opportunity to make their experience even easier for Chinese shoppers by offering WeChat Pay.
They have big reason to do so: Chinese shoppers spent US261 billion overseas in 2016, according to the United Nations World Tourism Organization. Still, last year proved tough for many luxury retailers in Europe as some popular shopping destinations took suffered lower Chinese tourist volume after several high profile terrorist attacks. With the rebound this year, stores like Galeries Lafayette have already begun revving up efforts to tailor shopping services to Chinese customers.
The partnership with Wirecard is just one step in a series of efforts by Tencent to expand its presence in Europe. The company already has offices in Milan and has been working with lesser known luxury brands to begin introducing them to Chinese customers through its e-commerce platform.