Editor’s note: In the early 2010s, Chinese payment systems continued to lag behind the rest of the world, with most people using cash instead of debit and credit cards. Now, the rest of the world is struggling to keep up as the world’s second biggest economy shifts almost exclusively to mobile payment systems WeChat and Alipay. A piece from our sister site, Jing Travel, shares which overseas partners are best positioning themselves to reach Chinese luxury shoppers when they’re abroad.
One of the biggest stories this year has been the dizzyingly fast expansion of Chinese mobile payments services abroad. The push abroad by Tencent’s WeChat Pay and Alibaba affiliate Ant Financial’s Alipay has two purposes for these companies. It’s hard to understate how ubiquitous mobile payments have become in China, everything from airline tickets to street food can be purchased through Alipay and WeChat pay by scanning a QR code. Given how integral these platforms are in Chinese consumer culture, it’s hard for a business catering to Chinese tourists to justify not having these payment options available.
Mobile payments are now an integral part of Chinese consumer culture.
Overall, Alibaba has the clear advantage in the mobile payments market with a 54 percent share of the Chinese market. Although WeChat Pay’s 40 percent market share does it put it at a disadvantage, the ubiquitous nature of Tencent’s messaging and social media app, integrated with WeChat Pay, does give Tencent an edge.
To help keep track of everything that’s been happening with these two firms in the last few months, we’ve put together a summary of some of Alipay and WeChat Pay’s big international partnerships in the last year. Both Ant Financial/Alibaba and Tencent are involved in wide array of industries, including travel, retail, gaming, and social media and these two firms paths forward, and integration of services isn’t always cut and dry. However, when it comes to the global strategies for their mobile payments platforms, the focus of their expansion is clear: Chinese tourists.
WeChat pay and Alipay’s global strategies in 2017 were centered around Chinese tourists.
The biggest hurdle for both Alipay and WeChat Pay abroad is its ability to integrate the payments platforms with local banking systems. It’s all well and good if a company wants to use Chinese mobile payments to facilitate tourist spending, but if the account can’t be connected to local banks or transaction systems, then it’s a moot point.
The biggest banking partnership in the last year was finalized in December 2016 between Ant Financial and four major European banks: BNP Paribas in France, SIX Group in Switzerland, Barclays in the UK, and UniCredit in Italy. The deal allowed Alipay to be usable within the banks’ merchant networks. Alipay also entered into a partnership with the Russian bank VTB Group in August.
Tencent has reached similar agreements, including a partnership with BNP Paribas, much like Alipay, in November of this year. WeChat Pay has also been enabled for use through Hong Leong Bank in Malaysia.
Banks aren’t the only global partnerships WeChat Pay and Alipay have engaged with, transactions services and fintech firms featured prominently in the worldwide expansion of these mobile payment platforms this year.
One of the biggest partnerships was between both WeChat Pay and Alipay and American, cross-border, mobile payment platform Citcon back in February. Both payment platforms have reached agreements with Uruguayan, emerging market-oriented cross-border payments firms dLocal in June and American payment services firm Stripe in July.
Alipay has even been able to sign memorandums of understanding with destinations to encourage adopting of Alipay among merchants. Singapore and Monaco both signed such agreements this year.
Partnerships with retailers have also featured prominently in the two firms’ global strategies; the most prominent was Alipay’s partnership with Marriot to encourage guests to use Alipay to book rooms.
While by no means an exhaustive list of Alipay and WeChat Pay’s fintech and banking partnerships, these partnerships help elucidate both platforms’ global strategy. In short, WeChat Pay and Alipay are less concerned with encouraging adoption of their platforms among consumers in other markets than expanding their market share among Chinese consumers.
These agreements are all centered around enabling as many merchants as possible to accept WeChat Pay and Alipay abroad, so Chinese tourists can always depend on their favorite mobile payments platform no matter where they are.
For Alipay and WeChat pay, being successful at home means being successful abroad as well.
Part of these efforts is undoubtedly to carve out a slice of the massive amount of Chinese tourist spending every year for Tencent and Ant Financial, estimated at $261.1 billion in 2016. However, arguably just as important is ensuring that users never have to abandon to favorite payment method no matter where they are. Tencent and Ant Financial want to make sure that their platform is available all the time, everywhere for Chinese consumers. For Alipay and WeChat Pay, being successful at home means being successful abroad as well.
This story was originally published at Jing Travel.