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By Pippa Horn
Western visitors to China could be forgiven for doing what most people would do when they arrive in a new country: head for an ATM to grab some local currency. The only difference in China? Months later, one will find that the stash of renminbi untouched; a relic of the past in a country where the majority of payments are now made with smartphones.
China has signposted the way forward as digital payments have dethroned cash and credit cards in a revolution that has caught on at lightning speed. The driving forces behind the digital wallet evolution can be largely pinned to rival payment platforms WeChat Pay and Alipay, who run more than 92% of China’s mobile payments.
Given the nationwide adoption of WeChat Pay and Alipay and the large volume of migration and tourism from China to the UK, businesses can cater to Chinese consumers simply by accepting these forms of payment. The UK is predicted to welcome a 43% increase in Chinese visitors, with a total forecasted spend of £1bn on high streets and leisure alone. Merchants can cater for the growing volumes of Chinese consumers in the UK and are able to reap the many benefits of using Chinese payment solutions, here are our top picks:
1. They’re more than just another Apple Pay
Although some of the benefits below apply to any tap-and-go payment system, there are several reasons why WeChat Pay and Alipay are superior in targeting Chinese consumers than their Western competitors.
In fact, foreign businesses who are looking to tap into the Chinese market would be forgiven for wondering why WeChat Pay is so successful in China. After all, it’s just another payment app, right?
WeChat Pay is just a mere of function of the WeChat app – China’s largest and most dominant social network with over 1.4 billion actively monthly users. It manages to successfully combine all of the most pertinent Western apps such as Facebook, Uber, PayPal and WhatsApp, into one smooth running ‘super-app.’
Among many other benefits, the app is such that users automatically follow a vendor’s official account when purchasing.
This enables consumers to make future purchases through the app, even when they return to China, offering UK merchants with WeChat official accounts a competitive edge.
The fundamental difference is that a digital transaction via a Western mobile payment platform signifies the end of a relationship between a buyer and a vendor, whilst the use of WeChat Pay is merely the start.
2. Meeting consumer preferences
According to Nielson, 93% of Chinese tourists prefer to use mobile payments when overseas. Over 900 million people trust their WeChat and Alipay wallets to pay for bills, luxury goods, online purchases and more, while only 7% of Chinese consumers trust their Apple Pay wallets to make similar purchases.
Chinese tourists want convenience, speed and familiarity, particularly with big ticket items. Their naturally sceptical nature makes having a recognisable point of sale terminal more important as it represents comfort and security while abroad, drawing in the Chinese customers, while also minimising communication barriers.
Ultimately, all that matters is catering to your customers’ preferences. By offering a payment method that is familiar and credible to 1.4 billion Chinese shoppers, the transactions are born out of habit, ease and the knowledge that costs will not exceed the value of the purchase itself.
3. Big Spenders
Today Chinese shoppers’ appetites extend beyond China’s borders and can sway the fortunes of global fashion labels. China makes up 30% of all luxury goods sold worldwide, while only 3% is purchased in China. It is not uncommon for Chinese tourists to travel to the UK for the sole purpose of buying goods that they can ensure are genuine.
The spending power and influence of China’s consumers will only grow as China’s middle class continues to rapidly expand. Wealthy Chinese people are willing to spend extortionate amounts of money – and mobile payments make it even easier to mindlessly spend. As such, UK merchants can entice up to 73% of Chinese consumers to spend more by offering WeChat Pay and Alipay.
4. Accepts multiple currencies
When WeChat Pay and Alipay are used in foreign countries such as the UK, the amount entered in the foreign currency is automatically converted to CNY using the platform’s spot exchange rates. These rates are typically lower than international credit card rates, in order to make it easier and more transparent for both parties.
The ability to pay for transit, groceries, and other products by simply waving a mobile phone near a point-of-sale (POS) device represents an exciting new era of payment. But in many countries, the acceptance of this technology has been lukewarm at best.
The Chinese are leap years ahead in terms of their understanding and trust in the security of their digital wallets. Both platforms have a number of precautions in place to protect the merchants and user. WeChat Pay for example provides security features like data encryption, website phishing protecting and payment limits, to guarantee a secure transfer of funds – thus proving to be the safest payment in China.