Video: Payments Abroad – China Outbound Travel Pulse – Episode n.25

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In recent years, urban China has transformed from a cash-based economy to one that runs mostly on mobile payments. Across the world, businesses catering to Chinese tourists are racing to keep up.

Interviews with Chinese tourists:

How do you normally pay for things in China? Do you ever use cash?

Basically, I use mobile payments and my bank card in China. I do use cash, but not often.

I use mobile payments in China. WeChat Pay and Alipay.

Alipay and WeChat Pay.

Which payment methods have you used when traveling abroad?

There two payment methods overseas: Cash and credit card.

Cash.

Cash or credit card.

Cash, local currency.

How often did you use mobile payments abroad?

Mobile payments are not common. I usually use cash or Visa card.

There is huge difference in mobile payments between China and overseas. Mobile payments overseas are (way behind). I hate using coins. If I borrow money from friends to buy something, I have to make sure I pay back the right amount. There are mobile payment apps in other countries, but it’s not very practical, and the popularity is low. So, it’s not meaningful when you can use mobile payments but they can’t.

Did you exchange money before traveling?

Yes, I did. I usually exchange money in advance. I’m from Dalian, so I will go to bank [in Dalian] to exchange money before I travel.

Yes, but not often. I use a Visa card. It can be used anywhere. I’m okay with credit card processing fees.

Because I have a local bank account, I can use local currency directly. I haven’t encountered any problems when exchanging money.

Analysis:

According to World Bank data, only 21% of Chinese citizens own a credit card, compared to more than 70% of US citizens. In the past, this forced many Chinese to travel with large amounts of cash overseas, making them an easy target for robbery.

Instead of credit cards, most Chinese have debit cards issued by China UnionPay, the largest payment scheme in China, and second largest in the world behind Visa. Over the past decade, China UnionPay has become accepted in many countries, both at ATMs and retailers.

China dominates the world’s mobile payments market, with a transaction volume of over 41 trillion USD in 2018, according to the People’s Bank of China. The main players are Alipay and WeChat Pay, which both work through scanning QR codes. Alipay has a higher market share, but Chinese tourists are likely to have both.

East and Southeast Asian countries were the earliest to adopt Chinese mobile payment systems, but Alipay and WeChat Pay users can now use their phones to shop on six continents. As of 2019, Alipay is accepted in 55 countries, and WeChat Pay in 49. Businesses that accept these payments include retailers, taxis, hotels, restaurants, and even public transportation systems.

A 2018 study by Alipay and Nielsen revealed that 91% of Chinese travelers were more willing to spend if Chinese mobile payments were accepted. Their top reason for using mobile payment was convenience [64%]. Nearly half [48%] said it made them feel proud to see Chinese payment platforms accepted abroad, and 43% said they preferred mobile payments because it saved them needing to exchange money, and got them a better exchange rate. Anecdotally, accepting Chinese mobile payments leads to greater and more spontaneous spending.

Alipay also helps to drive sales through their app, which provides users with information on nearby promotions, recommendations, business listings, and travel itineraries.

Professor Outbound:

With mobile payments now ubiquitous in China, accepting them is becoming a must for businesses that want to welcome Chinese tourists and offer them the same conveniences as they are used to at home.