Chinese mobile payment giants make landfall in U.S.
China’s two largest mobile payment platforms – Alipay and WeChat Pay – will both be expanding to the U.S., thanks to recently inked deals.
On Monday, Alipay announced a partnership with American payment processing firm First Data Corp. to make the platform’s online-to-offline payment services available at four million businesses in the U.S. This move came just days after AliPay’s rival WeChat Pay launched its own stateside operations based on a February deal with Silicon Valley startup Citcon.
Both companies are initially seeking to target Chinese tourists visiting the U.S.
“Chinese tourists are forecasted to spend over US$255 billion abroad by 2025,” Forrester senior analyst Wang Xiaofeng told the South China Morning Post. “It is only natural for the two companies to choose the countries and regions that Chinese consumers will travel to the most to expand their business.”
This opens up a new North American front in the fight for supremacy between China’s biggest mobile payment platforms, and also could eventually lead to increased competition for the likes of ApplePay and Android Pay.
Alipay, a subsidiary of Chinese tech and telecom giant Alibaba, is the elder statesman of China’s mobile payment space, launching as a payment processor for Alibaba’s e-commerce operations in 2004. Alipay now has over 450 million active users, and accounts for around 55% of China’s mobile payment market. In the past year, it has enhanced its presence in Southeast Asia by acquiring the Singapore-based helloPay, and put in a $1.2 billion bid on MoneyGram.
WeChat Pay is the mobile payment function of the popular social messaging app owned by Tencent. Though a relative newcomer to the payment scene, WeChat Pay quickly became AliPay’s largest domestic competitor due to the ubiquity of the messaging service. One recent report found that 35% of Chinese users’ smartphone screen time is devoted to WeChat. WeChat Pay thus far has a smaller international presence than Alipay, but has started to establish a foothold in Europe in recent months.
“Digital payment platforms remain a critical part of the underlying fintech infrastructure in China but are also an important source of transaction and financial data that is increasingly being leveraged by the payment companies for new fintech platforms, products and services,” Zennon Kapron, principal at Shanghai-based consultancy Kapronasia, told the Financial Times.
Together, Tencent and Alibaba account for about 90% of the Chinese mobile payment market, which tripled in value to $5.5 trillion last year. By contrast, the value of mobile payments in the U.S. was about $112 billion in 2016.