Alipay vs WeChat: Challenges and strategies of two payment giants going global
By Emma Lee
Cash has taken hundreds of years to establish its status as a common medium for trade, but it is quickly turning obsolete across China. Replacing it, the ubiquitous QR code-based mobile payment solutions operated by internet giants like Alibaba and Tencent.
From flagship stores of top-notch luxury brands to street butcher shops, payment through third-party apps is as valid as cash itself, only with faster and less of a hassle. Data from research institution iResearch shows that the value of China’s mobile payments market tripled to more than RMB 38.5 trillion ($5.6 trillion) in 2016 and is projected to reach RMB 55 trillion in 2017.
Now the same mobile payment craze that has taken China is making a foray into overseas markets. Alipay and WeChat Pay, the two third-party payment tools that nearly split China’s mobile payment market, are pushing the trend.
Who controls the tourists…
When tapping overseas markets, both companies chose the soft landing approach through easy entry points in Chinese outbound tourists. Known as the world’s most voracious spenders, 135 million Chinese outbound tourists spent a total of $261 billion in 2016, according to World Tourism Organization.
Like in China, the two firms are diligently forming local partnerships to promote themselves as a commercial solution. But the partners they are looking at skew toward those more commonly visited by tourists, such as airports duty-free shops, scenic spots, restaurants, and convenience stores.
Regions and countries like Hong Kong, Thailand, Japan, and Korea are the most popular destinations for Chinese tourists. They are also the places where Alipay record most active overseas usage, a spokeswoman from Ant Financial told TechNode.
Although tourist consumption remains the top priority in the overseas market, the companies behind them are moving towards local users through investment or partnership with local firms. Since 2015, Alipay’s operator Ant Financial invested a series of local e-wallet and fintech startups including Paytm (India), Kakao Pay (South Korea), Mynt (the Philipines), Ascend Money (Thailand), and HelloPay (Singapore).
“In the long run, synergy effects between Alipay and these firms would be created for sharing the technologies, data, users and consumption scenarios,” Andy Li, CEO of SEA fintech startup Silot, commented.
From Alibaba’s perspective, it’s more appropriate to define the initiative as the globalization of Ant Financial’s whole financial ecosystem, of which Alipay is just one part, according to the Ant Financial spokeswoman. Ant Financial expects half of its users coming from overseas market in the future four years, local media has reported (in Chinese).
On the other hand, social networking and gaming giant Tencent is also trying a similar path with investments in Australia-based cross-border payment startup Airwallex, shortly after Tencent co-founder Zeng Liqing invested in RoyalPay, another Aussie cross-border payment service April this year.
“Both Alipay and WeChat Pay are going after tourists first… In stage two, they will open up local wallets to enable peer-to-peer transactions within the local economies. That’s quite ambitious because there’s a lot of regulations,” commented Matthew Brennan, co-founder of China Channel.
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Read more here:: technode.com