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Chinese tourists are driving mobile payments across the globe

The number of Chinese tourists abroad hit 122 million in 2016, with a vast majority of them paying via their mobile phones. That’s according to a new study from Kapronasia and CANCAN. The survey pool contained 1,000 Chinese consumers abroad and 60 global merchants.

As one of the largest and fastest growing economies, China represents a great potential for those able to crack the country. But abroad, adapting to Chinese payment foibles can be rewarding too. Alipay and WeChat Pay are the go-to payment methods for China’s holidaymakers. While 67% of respondents reported that they use Alipay or WeChat Pay for overseas purchases. This represents about 41% of overseas consumption and tourists used mobile payments for more than 10% of total transactions.

The report also highlights how Chinese tourists are spending more and more in retail ($900 on average in 2016), instead of luxury items. Only 5.7% spent more than $6,288, with a total amount of $109.8 billion throughout 2016.

80% of merchant respondents cited consumer demand as one of the main reasons for adopting mobile payments, with 70% adding that mainland Chinese consumers were their largest source of global revenue. Clothing, makeup, skincare, food and beverages top the list of goods purchased with mobiles, with travel and accommodation not far behind.

The survey shows that mobile payments are an increasingly popular payments method for Chinese citizens traveling abroad and as transaction values for mobile payments are expected to increase, merchants have to be aware of these changes.

AliPay and WeChat dynasties

Alibaba’s AliPay and Tencent’s WeChat processed $2.9 trillion in payments in China in 2016. According to reports, China saw 17% of all retail transactions done digitally by 2010.

These types of digital payments and financial services have expanded financial inclusion and economic opportunity throughout China, and has the ability to do so in neighbouring countries, particularly developing economies with a large mobile phone usage.

In spite of AliPay’s larger payment volume, WeChat has been able to capitalise on chat and social services to acquire a larger user base worldwide, which Alibaba has been playing catch up with. An example of the former is Western Union, who has been partnering with platforms like WeChat to integrate cross-border remittances with their chat system.

AliPay is on its way of being deployed worldwide, with the notable addition of South East Asia after the recent acquisition of helloPay by Ant Financial.

AliPay has been deployed in a variety of countries throughout the West too, integrated through partnerships in the UK with Zapper, Australia with CBA, Wirecard and NBG in Greece, Unicredit in Italy, and others.In the US, AliPay is challenging Apple Pay through a deal with payments processor First Data, allowing over four million US merchants to accept payments via the Chinese service. AliPay has also partnered with Verifone to tap into these markets.

The key to China

China is expected to witness the highest growth rate during the forecast period, due to the large pool of underbanked consumers and surge in online and mobile users, with digital entrants leading the transformation. Just during 2016, fintech investment in the country outpaced the UK and US.

Earlier this year too, IBS reported on a statement by Dr. Zhengyu Wang, founder, chairman and CEO at China Rapid Finance, in which he said that consumer finance to China’s vast population can only be effectively tackled with a high-tech solution that enables low-cost customer acquisition through big data.

Yihan Fang, CEO at Chinese lending firm Yirendai, also commented earlier in the year that the Chinese consumer finance market is already settled in its strength, but must undergo an optimisation process.

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