Leapfrogging into cashless tourism

by Prof. Dr. Wolfgang Georg Arlt FRGS FRAS

The English word “cash” originates from the Chinese term for round copper coins, moving with traders physically all the way already from Han Dynasty China to the Roman Empire and linguistically from Tamil and Sanskrit to Old Italian to Old French to Middle English, reaching Germany in the form of “Käsch”.

In the 21st century, Chinese outbound travellers became the preferred targets for pickpockets around the world. In addition to becoming increasingly conspicuous as they became the biggest international tourism source market globally in 2012, Chinese outbound travellers were also known to carry bundles of cash (not coins anymore, bills now) with them. In several well-documented cases the amounts in question reached high five-digit numbers in Euro or USD, prompting the Chinese government to issue travel warnings for specific destinations and official apologies by ambassadors in Beijing.

One reason might have been that the travellers were planning to spend large amounts on watches and jewellery or roulette chips with money of questionable origin. For most travellers, however, it was simply down to a lack of internationally-accepted credit cards as well as a tradition of cash payment, which let them take their money with them in this form.

All this is changing now, and in the same way as Chinese travellers brought hot water cookers to almost all hotels in the world and introduced the idea of selfies in travel photography to the smartphone society, it is changing not only for the Chinese.

In China, another process of leapfrogging is taking place. The country has moved from no phone to smartphone, from single-storey to high-rise urban apartment buildings and from limited, cranky passenger rail transport to a high-speed train network with more track than all others in the world combined. It missed by a decade the jump from no car to electric car, with dire ecological consequences, but is nevertheless hurrying to catch up here as well.

From less than 100 million users at the beginning of the decade, the number of mobile payment users has grown to more than 600 million in China. Cash or credit card payment is not accepted anymore by many shops, taxi drivers, etc. in the cities across the country. COTRI research in Shanghai and Beijing found that in Spring 2018 the majority of people interviewed in both cities had not used any cash or credit card for at least four weeks.

Alipay, owned by ANT, the mother company of Alibaba, and WeChat Pay, owned by Tencent, the fifth largest company in the world, together share more than 90% of the mobile payment market. Smaller companies like Union Mobile Pay, daughter of UnionPay credit cards, or Lianlian Pay, have all less than 2% of the market.

Hangzhou, home of Alibaba, has declared its intention to become the first completely cash-free city in China by the end of 2018. Further afield, Finland is the first international destination which has stated its goal to make it possibly to travel within the country using solely Alipay.

In 2015, international tourism service providers and retailers started in bigger numbers to accept UnionPay credit cards, but have now upgrade to payment by smartphone, as credit cards, which were often used only for international travel, are decisively out of fashion in China.

How will this development change global tourism? Alipay is quickly moving to international markets, repeating the leapfrogging process in many countries in Asia and Africa. By May 2018, Alipay claimed to be available in 110 countries. Face recognition for ATMs for countries still cash-based has however not yet been introduced outside of China.

WeChat Pay only offers services for local citizens in Hong Kong SAR. In 25 countries, services are available, but concentrating on Chinese travellers only. However, since early 2018 non-Chinese users can connect an international credit card with their WeChat account.

Pushed by almost unlimited resources (Tencent is currently the biggest global investor), it is likely that within the next five years Alipay and WeChat Pay will become the standard form of payment at least outside of OECD countries. This will provide the companies – and implicitly the Chinese government – with huge amounts of Big Data about the spending pattern of billions of persons, including of course their own outbound travellers.

The acceptance of Alipay will quickly move from being an extra service offered to Chinese customers to an expected service without which non-Western customers will be turned away.


The existence of Minitel delayed the introduction of the internet in France for years in the 1990s; the development of dual-use rail networks drove the ICE high-speed train technology into a dead end at the beginning of the new millennium. German carmakers in the last decade rather decided to cheat systematically than stopping the development of fossil-fuel based automobiles.

Successes of the 20th century can turn into albatrosses around the necks of OECD industries and countries if not followed up by a clear and decisive innovation strategy. Looking back at the first 1/6 of the 21st century, no such strategy is striking the eye. Jinjiang, Dalian Wanda, HNA and other Chinese companies, even if recently forced to slow down their expansion, are moving in global tourism, hospitality and entertainment forward to fill with innovation and investment the gaps left by the current players.

COTRI Intelligence

COTRI Intelligence is the indispensable source of weekly consulting, analysis, data and news for everybody seriously interested in the post-pandemic Chinese outbound tourism market and changing Chinese consumer preferences.  COTRI Intelligence is published by COTRI China Outbound Tourism Research Institute and edited by Prof. Dr. Wolfgang Georg Arlt FRGS FRAS. Regional partners and Content partners [...]

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