Shanghai: Chinese payments giants Alipay and WeChat Pay, long a source of worry among competitors abroad, plan to open up their platforms to foreigners visiting the mainland as regulators ease restrictions.
The apps, which dominate payments across the world’s second-largest economy and have even supplanted cash at some businesses, announced the plans in rapid succession after previously requiring users to have local accounts. Opening up to visitors may give an incremental boost to spending on the platforms - but for overseas firms, it has big implications, potentially helping pave the way for future adoption abroad.
“Although there will be some revenue coming from the foreigners using the card, the more interesting aspect is how seamless the cross-border Alipay and WeChat Pay experience is becoming,” said Zennon Kapron, founder and director of research consultant Kapronasia.
Behind the scenes, China’s central bank recently told a number of payments firms they will soon be allowed to plug foreign cards into their apps for use in China, according to two people with knowledge of the situation. Previously, regulatory concerns about money laundering and cross-border cash flows had prevented that from happening. The central bank offered no immediate comment to an inquiry sent by fax.
The move will provide relief to some of the more-than 30 million people who visit China annually and sometimes struggle to find alternate payment methods. Alipay and Tencent account for 94 per cent of the country’s mobile-payment market.
Already, Alipay and WeChat Pay’s logos are visible in stores and taxis in major cities around the world as the firms focus on helping Chinese travelers there. The expectation across the industry is that the apps will someday use that infrastructure to attract locals in those destinations.
To be sure, the ability to work with credit cards is still pending. In its announcement, Ant Financial’s Alipay laid out a system that will work around current restrictions and can start immediately.
Alipay said it’s letting travelers use a prepaid card service provided by the Bank of Shanghai. That means customers will have to periodically top off that account, which will be limited in amount.
In contrast, Tencent Holdings Ltd.’s WeChat Pay intends to let people more directly connect their existing cards to its app. Visa described that plan in a statement of support early Wednesday in China, saying it will essentially enable its cards to work across China.
“This is a great step forward, both for consumers traveling to China and the overall payments industry,” Visa said. “This partnership means that we’ll be working towards an environment where Visa cardholders will be able to use their Visa card in China at the millions of places where WeChat Pay is accepted, instead of having to rely on cash.”
The companies didn’t provide a time frame.
Tencent, acknowledging that it’s working under guidelines from regulators, said it has been discussing cooperation with U.S. card-network operators Visa, Mastercard, American Express and Discover as well as Japan’s JCB to support the linking of overseas credit cards to Wechat Pay.