(Chinese Version)

Coincidentally, some popular YouTubers, envious of the widespread usage of mobile payment, all posted videos and introduced the popularity of mobile payment in China and the huge convenience it brings. Indeed, thanks to the widespread of Alipay, WeChat Wallet and other mobile payment tools, it’s common for Chinese to go out without bringing their wallet or debit cards, since they can almost pay any bills and book a variety of services with their smartphone. As a matter of fact, WeChat Pay and Alipay have already made efforts to go abroad.

Recent developments of Alipay and WeChat Pay in overseas markets

1. Alipay

In fact, Alipay just launched a Hong Kong version of Alipay APP recently, the first of its kind outside mainland China. Prior to this, Alipay also provided e-wallet service for overseas users. However, this new version is a more formal demonstration of Alipay’s ambition to go beyond mainland China. Up till now, Ant Financial has already teamed up with local partners in India, Thailand, South Korea, the Philippines, Indonesia and provided e-wallet service for over 200 million overseas users.

Besides e-wallet service, Alipay has also been expanding its influence in tourism consumption and has made some concrete progress. As of this May, users can use Alipay in many European airports and tax-free stores. 21 Rossmann supermarkets in Germany are now supporting Alipay and as many as 2,000 will join and support Alipay in the near future. For sure, this will make it extremely easier for Chinese tourists and students to travel around or study in Germany.

Besides, airports, DFS’s tax-free stores and LV stores in major American tourist destinations, including New York, Los Angeles and San Francisco, etc. have all supported Alipay. It is expected that 4 million American business brands will support Alipay in the near future.

At present, Alipay has already entered 26 countries and regions around the world, including European countries, the U.S., Japan, South Korea, South East Asian countries, Hong Kong, Macau and Taiwan, etc. and supported payment via 18 foreign currencies. As over 100,000 offline stores overseas have already supported Alipay, it has already started to spread its influence outside mainland China.

Having been eyeing overseas for almost a decade, Alipay seems to have made extraordinary progress in both overseas tourist consumption and e-wallet sector. Alipay’s has to do with not only the reliance and loyalty of Chinese tourists, but also the lack of rivals in the overseas mobile payment market.

2. WeChat Pay

Born as late as in August, 2013, WeChat Pay suffered from a huge challenge from Alipay at the primary stage. However, thanks to its huge influence in the social networking sector, WeChat Pay soon caught up and grabbed part of Alipay’s market share. Likewise, WeChat Pay has also been actively making efforts to go abroad, though much later than Alipay.

To repeat its success in mainland China, WeChat also launched an overseas version of WeChat APP in an attempt to build an active social network overseas and then promote related services. Up till now, WeChat has already gained over 100 million users outside mainland China, including Lybia, Brunei, Japan, Macau, the UK, etc. WeChat’s approach is a slow one, so it may take some time, though it’s likely that WeChat might again turn the table and surprise everyone.

As a matter of fact, Alipay and WeChat Pay have already been engaged in head-on competition. To attract Chinese tourists to use WeChat Pay overseas, WeChat has teamed up with CITCON to enter the US market. A month ago, WeChat also announced that it would soon enter the UK market.

As of this May, WeChat Pay has already entered 15 countries and regions and supported direct billing via 12 foreign currencies. Although WeChat Pay still lags behind Alipay, it’s already quite impressive for WeChat Pay to make such progress as a late entrant.

The existing challenge Chinese mobile payment service providers are facing

1. The limit of tourism consumption

In fact, the primary focus of both Alipay and WeChat Pay overseas has been tourist consumption. Although they’ve also focused on other sectors, such as e-wallet and social networking, etc., tourism consumption remains their top priority.

Although an enormous number of Chinese tourists travel abroad every year, they still take up a small proportion compared with the overall population. In this case, Alipay and WeChat Pay’s market is quite limited, since they both primarily target Chinese tourists. Even if all Chinese tourists used WeChat Pay and Alipay one day, this market would still be incomparable to the local market.

As long as local residents can’t use Alipay or WeChat Pay and enjoy its convenience, it will be rather hard for Chinese mobile payment service providers to expand overseas. However, it takes time to develop user habit and make mobile payment part of local residents’ lives. In the short term, they will have to make up the limit with other aspects of services.

2. The difficulty in promoting e-wallet service

It’s also no easy task for Chinese mobile payment service providers to promote e-wallet service overseas. Although overseas markets may be under-developed, there are special cases. As a matter of fact, some countries do have mobile payment service providers like PayPal, Apple Pay and Google Wallet, etc. The only difference is that mobile payment is not as widespread as it is back in China.

Currently, Alipay’s overseas expansion is still centered around East Asia and South East Asia, while Ant Financial hasn’t been able to dive deep in the European and American markets. While European and American markets have a solid foundation for mobile payment, South East Asian countries are often poorly grounded. Therefore, it’s a lot easier to enter these markets.

Compared with Alipay, WeChat may face even more difficulty in its overs expansions. How come? In a sense, what WeChat does in China is what Facebook and Twitter do abroad. Faced with the huge challenge from overseas social networking platform, it’s no easy thing for WeChat to expand in overseas markets, let alone promoting its mobile payment service. Worse still, WeChat may not understand well the user habit of overseas users. This may help explain why users of the overseas version of WeChat APP are still mainly overseas Chinese.

Some potential obstacles in WeChat Pay and Alipay overseas expansion

1. Xenophobia

It’s common for people to get xenophobic against things they are unfamiliar with. For example, South Korea is known to be xenophobic against foreign enterprises and South Koreans often prefer to buy products and enjoy services from local brands. Such mentality is even more obvious when it comes to money.

In response, Alipay chose to avoid direct competition with South Korean counterparts and team up with Kakao Pay, a local third-party mobile service provider, to enter the South Korean market. It is only by means of a local brand that Alipay can reduce xenophobia against a foreign brand like Alipay.

In fact, such mentality is also widespread in other countries. After all, xenophobia can’t be eliminated. The only thing a foreign brand can do is reduce and avoid it. This rule also applies to WeChat in its overseas expansion.

2. Challenge from local mobile payment service providers

Although Chinese third-party mobile service providers are rapidly developing, it doesn’t mean there aren’t their counterparts in overseas markets. Although it may not be as widespread, it is nothing too novel. For example, the US has PayPal, the UK has World Pay, Canada has Alert Pay. These local mobile payment service providers don’t necessarily have a shorter history than Alipay and often have a solid user base. Therefore, it will be rather difficult to make a difference in these overseas markets.

Worse still, there may also be a couple of mobile payment service providers in many countries, which makes it even harder to expand in these markets. For example, India has local mobile payment service providers including Paytm, FreeCharge and Mobikwik. After India discontinued 500 and 1000 rupee currency notes, these service providers enjoyed a rapid growth. Among them, Paytm takes a big lead, as Alipay once did back in China.

The Indian mobile payment market is already quite competitive, let alone the European and American markets. Although Chinese mobile payment market is comparatively speaking more developed and Chinese mobile payment service providers have more experience, experience is not enough to enter and stand out in overseas markets.

3. Governments’ interference

Again, let’s take India for an example: As the competition among Indian mobile payment service providers continues, the Indian market announced that it would soon launch a Unified Payment Interface (UPI) and BHIM, a government-backed mobile payment tool, which, for sure, is going to have a huge impact on the Indian mobile payment market.

The decision came not only as a major blow to Indian third-party mobile payment service providers, but also their foreign counterparts. In response, both Alipay and WeChat Pay have to adopt some “flanking tactics”.

While Alibaba shifted its support towards Paytm, the largest third-party mobile service provider in India, Tencent shifted its focus on e-commerce and invested $1.4 billion in Flipkart, the largest Indian e-commerce platform. Besides, it is reported that FreeCharge and Mobikwik are under the pressure of Chinese investors to merge together.

The financial industry has always been a lifeline of a country’s economy, while payment also constitutes a key part of the industry. To maintain stability, governments may have the incentive to have large control over the sector. Therefore, WeChat Pay and Alipay will have to face another major challenge, especially when such policies may be adopted in even more countries and regions.

4. Competition with other foreign mobile payment service providers

In addition, since Alipay and WeChat Pay aren’t the only potent mobile payment service providers who eyed abroad, they also have to compete with other foreign third-party payment giants.

It is reported that Facebook’s WhatsApp is going to launch its own online payment service in India and plans to cooperate with the Indian government to enter this battle. Although Facebook doesn’t have much experience in mobile payment, it is still a strong competitor especially based on its rich resources as a social networking platform.

To some degree, WhatsApp is quite similar to WeChat. Since WeChat caught up thanks to its active social networks, one might expect that WhatsApp can repeat WeChat’s success, especially when it has a broader user base globally. As long as WhatsApp takes appropriate measures, it may take less time for WhatsApp, compared with WeChat, to rise into a major third-party mobile payment service provider around the world.

However, it is worth noticing that Facebook may not necessarily be at an advantage than WeChat and Alipay in terms of third-party payment technology. Likewise, although Samsung and Qualcomm are industry-leaders in terms of wireless charging technology, their Chinese counterparts such as Weie Tech and BYD don’t lag far behind them.

As is mentioned above, although Alipay and WeChat Pay look quite promising in their overseas expansion, they do have to face a couple of major obstacles.

Although both WeChat Pay and Alipay focus their attention mainly on tourism consumption at present and attempt to gradually extend into other services by making full use of their advantages, they do encounter some limits and setbacks. To some degree, the competition with PayPal and Facebook may pose an even greater challenge for them than tourist consumption.

Alipay aims to further expand its e-wallet business and make the same difference in the overseas and domestic markets, extending its influence from mobile payment to people’s life, e-commerce, financial management and business retailing.

WeChat, however, attempts to make breakthrough starting from people’s lives, especially social network. Although it’s impossible for WeChat to make much progress in the short term, especially faced with the competition and challenge from its rivals, it is likely that WeChat could achieve its goal one day, based on its rich experience in both social network and mobile payment.

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[The article is published and edited with authorization from the author @Shu Mile please note source and hyperlink when reproduce.]

Translated by Levin Feng (Senior Translator at PAGE TO PAGE), working for TMTpost.