By Pu Jin
While, mobile payments from QR codes are now becoming an integral part of the consumer culture around the world including in Nepal, for decades, WeChat Pay and Alipay have been the two most popular lifestyle super mobile payment platforms in China, deeply embedded in the daily life of the people. Until recently, the rest of the world continued to develop card-based payment technology and largely stayed away from emerging digital payment technology. However, in China, alternative ways to pay, such as digital wallets and QR codes, were being explored and introduced. China has been moving rapidly toward a cashless society as the government pushes for the adoption of a digital yuan.
Of the various payment platforms, two of China’s big-tech players, Tencent and Alibaba, owners of WeChat Pay and AliPay respectively, have completely revolutionised the payment industry with the introduction of an alternative payment ecosystem. A payment function resides within these apps and Chinese and foreigners living in China can simply link their bank account to make payments by scanning a QR code with their smartphone. Whether it’s shopping online, ordering food, getting a taxi, topping up your electricity, paying your utilities’ bill, paying for a subway ride or the local bus, buying train tickets to plane tickets, getting a loan, sending money to friends or borrowing a bike is just simply made with the scan of a QR code.
WeChat Pay is owned by Tencent Holdings Ltd., also known as Tencent, it is a Chinese multinational technology and entertainment conglomerate and holding company headquartered in Shenzhen. It is also the largest company in the gaming industry in the world based on its investments. WeChat Pay was developed as an additional feature within China’s must-have instant messaging and social media app called WeChat which was launched in 2011. In 2013 WeChat’s virtual wallet payment system, WeChat Pay (also referred to as TenPay) was introduced.
Alipay is owned by e-commerce giant Alibaba Group Holding Limited, also known as Alibaba and it is a Chinese multinational technology company specializing in e-commerce, retail, internet, and technology. It is China’s and by some measures, the world’s biggest online commerce company. Alibaba was first introduced in 2003 as an online digital payments solution for the Alibaba website. In 2008, Alipay officially introduced its mobile e-wallet and has become a regular payment facility that services not only Alibaba products. Before WeChat Pay was introduced Alipay completely dominated the smart and mobile payment market within China.
While Alipay has been around for longer, both payment systems are used widely and frequently among Chinese consumers. Both, WeChat Pay and AliPay have experienced consistent usage growth as a result of growth in their business models and of the various payment platforms they together comprise 94% of the market share in China. Given the fact that almost everyone in China uses WeChat it’s no surprise that WeChat Pay now has more monthly active users than Alipay, although year on year users of both smart payment systems have been growing. The main difference between WeChat Pay and Alipay is that WeChat Pay is an in-app feature of the social media app WeChat whereas Alipay is a dedicated smart and mobile payment system. Although both systems can be used for similar things the focus of them is slightly different.
WeChat Pay and Alipay are now investing heavily in overseas payment and are approaching growth from a very different angle making them the market leaders for mobile payment overseas. There is no disputing that China is ahead of the rest of the world in mobile payments. China’s mobile payments revolution offers lessons for bankers elsewhere, especially in a country like Nepal, looking to keep pace in a world filled with smartphones and third-party ecosystems eager to encroach on traditional bank space. It is estimated that Alipay and WeChat Pay cross-border’s annual transaction volume amounts to around 200 billion RMB, compared with the total mobile transaction volume within Mainland China (152,770 billion RMB), which is a mere 0.13% of the total transaction amount.
In 2019, Nepal’s central bank banned China-based digital wallets WeChat Pay and Alipay amid fears of loss of foreign currency earnings. The illegal use of digital wallets had enabled Chinese business operators, who received payment via these apps, to repatriate earnings to their home country by circumventing local tax networks because they left no evidence to substantiate that those transactions took place in Nepal. However, last year in February, Nepal’s central bank gave permission to China’s two leading digital payment platforms WeChat Pay and Alipay to start electronic payment services in the country. It’s a way that the Chinese tourists or businessmen can pay in their home currency with the local business having the deposit done in Nepalese currency.
However, due to some technical reasons and as a result of the coronavirus outbreak due to which Chinese travelers have not visited Nepal, both payment system has not yet started providing their services in the country. As WeChat Pay and Alipay also serve as a way for businesses to cater to Chinese tourists and local shoppers particularly in the hospitality sector such transactions made legally will contribute to remittance while transactions by entrepreneurs will also contribute to revenues and this level of convenience is just what Chinese consumers are looking for.
It’s very likely that WeChat Pay and Alipay will remain prominent and at the forefront of the payment industry around the globe for the foreseeable future. While, the business may not have existing relationships with Chinese businesses or consumers today, that may change with the added capability after the commercial banks in Nepal prepare necessary infrastructure for payments through the two Chinese payment service providers that can be made legally. There is mounting confidence that Chinese tourists and businesses will bounce back in the future and now may be the time to prepare your business for their arrival.
Login to add a comment