EDITORIAL: Chinese mobile payment

Since the dawn of Chinese outbound leisure travel, a key issue for residents travelling internationally has been the topic of appropriate payment methods that fall in line with the country’s foreign exchange controls.

In the past, travellers would be grateful to see signs for showing that Chinese UnionPay cards were accepted, limiting their reliance upon carry large amounts of foreign currency and become a popular target for pickpockets overseas.

However, in recent years, China has undergone somewhat of a payment revolution and has seen smartphone-based mobile payment become a way of daily life to an extent that is as yet unseen almost anywhere else the world. This trend is being led by Ant Financial’s Alipay and Tencent’s WeChat Pay platform, which is built into the virtually ubiquitous WeChat app.

Accordingly, January to October 2017 saw the total value of mobile payments in China reach 81 trillion RMB (ca. 12.8 trillion USD), more than 35% higher than its own 12-month total of 58.8 trillion RMB (ca. 8.8 trillion USD) and far overshadowing the United States’ 2017 equivalent of 49.3 billion USD.

Consequently, mobile payment has become an indispensable part of daily life in China – as outlined in a recent article posted on LinkedIn by i2i Group CEO Alexander Glos – where even fruit vendors and buskers prefer accepting payment by smartphone over physical cash.

Following this widespread shift at in the domestic market, Chinese consumers are bringing their retail habits with them when travelling abroad. In addition to the convenience that mobile payments offer at home, when overseas such services offer the benefit of informing consumers which local businesses will accept mobile payment, as well as mitigating issues surrounding of limited cash or credit supplies, language, foreign currency exchange rates and even processing of tax refunds.

However, while Chinese outbound tourists once regarded the provision of Chinese UnionPay services as a courteous gesture, Alipay and WeChat options have now become a demand among travellers.

Consequently, for overseas businesses looking to target the Chinese market, Alipay and WeChat Pay facilities are rapidly becoming key services to provide for customers. While this is typically most prominent among retailers that have been at the forefront of the Chinese outbound tourist market, an ever-increasing range of businesses are adopting the practices in order to get ahead of the competition.

Finland, for example, has seen a nationwide drive – supported by the national tourism board – to provide Alipay services throughout the country and establish itself as the first overseas destination to offer a “fully cashless experience” to Chinese visitors.

This was notably put to the test in an Alipay campaign in which the company sent eight Chinese tourists sent on a six-day trip around the country, where they were encouraged to only make purchases through the service.

P.S. China’s contemporary shift towards mobile payments ahead of the rest of the world could be seen in the context of it already having introduced paper money as early as the 7th Century, something that didn’t catch on in Europe until a thousand years later.

Tellingly, the Chinese were arguably more efficient that their Western counterparts in combatting counterfeiting of notes too; rather than printing warnings on currency stating that forgery was illegal (as was the case with German banknotes up until the 1970’s), banknotes would instead carry a message encouraging ordinary people to report those suspected of manufacturing fake currency to the authorities and receive a reward!

More insights into the topic can be found in COTRI Director Prof. Dr. Wolfgang Georg Arlt’s presentation Online and Mobile Trends In China from the 2018 CVS China Visitors Summit Europe