Tencent extends WeChat Pay to the US with focus on Chinese tourists
Chinese internet giant Tencent Holdings, which runs one of the country's most widely used mobile payment tools, has taken its cashless payment system to the home market of Apple Pay by serving Chinese outbound travellers in the United States.
Through a partnership with Silicon Valley start-up Citcon, Hong Kong-listed Tencent now enables Chinese tourists to use smartphones to pay for their purchases at brick-and-mortar stores in the US through its WeChat Pay service.
WeChat Pay, an integrated feature of Tencent’s popular social network WeChat, has more than 600 million monthly active users, putting it a close second behind Alibaba Group Holding-backed Alipay in China’s trillion-yuan mobile payments market.
Chinese e-commerce giant Alibaba owns the South China Morning Post.
The US launch of WeChat Pay marks Tencent's latest globalisation, as the company and Alibaba seek to expand overseas amid their intense mobile payments competition on the mainland.
“Following Chinese tourists’ footprints, WeChat Pay has kickstarted cross-border services in China’s neighbouring countries and regions, such as Hong Kong, Japan and Southeast Asia and will gradually expand across the world,” WeChat said in a statement last week.
Wang Xiaofeng, a senior analyst with Forrester Research, said the reason WeChat Pay and Alipay are focusing on Chinese outbound travellers is because these are the most important target audience for travel and hospitality industries worldwide.
“Chinese tourists are forecast to spend more than US$255 billion abroad by 2025," Wang said. "So it is only natural for the two companies to choose the countries and regions where Chinese consumers travel to the most to expand their business."
WeChat Pay is available in about 15 countries and regions for payment in 12 currencies. Alipay, which enjoys first-mover advantage in mobile payments, is accepted in more than 100,000 offline stores in 26 countries across Europe, North America, East Asia, and Southeast Asia.
The lack of choice in non-cash payment and the rapid adoption of using smartphones to do everything from shopping and hailing a taxi to ordering food deliveries, have made mobile payment increasingly popular in China.
The value of Chinese third-party mobile payments more than tripled to 38 trillion yuan (US$5.5 trillion) last year, with a combined 90 per cent of the share going to companies affiliated with Alibaba and Tencent, according to estimates by iResearch.
In the US, the mobile payments market grew 39 per cent to US$112 billion last year, with market share dispersed among rival players including Apple Pay, Google's Android Pay, Samsung Pay and PayPal, according to Forrester Research.
Despite the huge transaction volumes of Alipay and WeChat Pay, Wang of Forrester Research said certain market entry obstacles, such as differences in business culture, consumer behaviour and regulations, make it unlikely the two companies will operate beyond their target of Chinese travellers in overseas markets.