Why WeChat Pay’s Overseas Push Might Not Work for Luxury Brands

    Whether WeChat Pay can become the best payment method for luxury brands will depend on if it can entice the majority of tourists to pay through their system.
    WeChat Pay is now accepted at two Parisian department stores of the Galeries Lafayette group, Galeries Lafayette Haussmann and BHV Marais. Photo: Petr Kovalenkov / Shutterstock
    Nina HuangAuthor
      Published   in Technology

    WeChat Pay is now accepted at two Parisian department stores of the Galeries Lafayette group, Galeries Lafayette Haussmann and BHV Marais, marking the mobile payment's first implementation at physical retailers in Europe. This is yet another move this year by Tencent to expand the use of WeChat Pay globally. How luxury brands might benefit from the payment platform remains to be seen.

    The plan, according to BNP Paribas, is to expand WeChat Pay to other European retailers who partner with the bank. Earlier this year, WeChat Pay announced a business venture in Japan and a push in Italy. Currently, transactions can be made in nine currencies.

    Even though WeChat Pay is expanding and its market share increasing, it is still not the most popular mobile payments platform in China. China is the world's largest mobile payments market with 138 billion in mobile payments transactions this year. Alipay accounted for 53.7 percent of total transaction volume and WeChat Pay accounted for 39.5 percent. The draw of WeChat Pay to merchants is not simply the potential to encourage purchases, but also the opportunity to connect with WeChat’s 980 million monthly active users for promotional purposes.

    After paying with WeChat Pay, users can then be prompted to follow the vendor's WeChat account. Although WeChat Pay hasn’t disclosed to the public how this is done in overseas markets, domestic practices provide some indication of how the practice would work. According to, the third-party website authorized by Tencent to give helpful tips to marketers, WeChat Pay enables retailers to automatically add buyers to their WeChat brand account when they check out and scan the provided QR code. It also has a feature to promote merchants’ products and promotions to active buyers within 48 hours after the purchase. By providing individualized service to buyers, Tencent believes that WeChat Pay can encourage shoppers to purchase again.

    This feature is enticing to foreign luxury brands as they are eager to find a way to connect with Chinese consumers. Just this week, the digitally averse label Celine launched a brand account on WeChat. Dior and Hermes also opened WeChat accounts earlier this year.

    However, whether WeChat Pay can position itself as the best payment method for luxury brands is still determined by a single factor: it's popularity among outbound Chinese tourists. Though WeChat Pay has made great strides, there are still substantial barriers to its success.

    WeChat Pay completes transactions with an on-the-spot exchange rate provided by China Construction Bank or China Citic Bank, which means that consumers’ Chinese yuan would be converted into foreign currency at the current exchange rate. This lack of flexibility may deter some consumers who want to take advantage of the best exchange rates. UnionPay, a card services company, allows users to pay off their balance of dual-currency credit card at the time of their choosing, so consumers can wait for the most favorable exchange rate.

    Moreover, even when attached to a bank account, WeChat Pay has daily, monthly, and annual transaction limits that differ with different banks. This can make it difficult for shoppers who want to splurge on expensive luxury goods abroad, as some bags, jewelry, etc. are priced well-above the daily transaction limit. While shopping overseas, WeChat Pay may not be the most convenient payment method for many.

    Finally, use of WeChat Pay hinges on local internet access. While some department stores, such as Galeries Lafayette Haussmann in Paris and Macy’s in New York provide WiFi, many brick-and-mortar stores simply do not provide internet access. This might stop Chinese tourists from using WeChat Pay because they may want to avoid turning on international data and paying extra fees.

    Without addressing the issues listed above, WeChat pay will struggle to succeed internationally.

    Discover more
    Daily BriefAnalysis, news, and insights delivered to your inbox.