Alipay vs WeChat Pay – A scramble for overseas markets
We are all too familiar with the ‘David vs Goliath’ allegory. However, where the clash is between two companies controlling more than 92% of an 18.8 trillion yuan (S$3.84 trillion as at time of writing) mobile payments market in Q1 2017, it becomes more of a ‘Goliath vs Goliath’ type of situation.
Despite their market dominance, both WeChat Pay and Alipay are not content with the status quo. Instead, they have been increasingly rolling out new measures through dishing out a slew of incentives (e.g. cash rebates and free bus rides) to boost their market share. As the intense competition between both mobile payment behemoths takes to overseas markets, we take a closer look at how WeChat Pay and Alipay have been positioning themselves overseas.
Collaboration with local players
One of the most common, yet effective, market entry strategies is to collaborate with local players. By joining forces with a local incumbent, the barriers to entry are significantly reduced because local players know the market and already have an established brand reputation. Just as how Apple entered the Chinese market through partnerships with local telecom companies China Unicom and China Mobile, , both WeChat pay and Alipay are seeking foreign partners as they venture overseas.
Recently, it was announced that both WeChat Pay and Alipay would enter into global deals with U.S. firm Stripe . With Stripe’s strong global presence, this would open up lucrative markets in North America, Western Europe, Japan, Australia and Singapore. Specifically, these deals would make it possible for online retailers in these countries to accept payment through both WeChat Pay and Alipay. The current deal also eclipses the previous agreement between Alipay and Stripe which had covered only the U.S. market. Learn more about Stripe here .
Marketing campaigns and promotions
After obtaining a foothold in foreign markets, both companies have also launched targeted marketing campaigns and promotions. In Japan, WeChat Pay launched a promotional campaign with Don Quijote , one of Japan’s most popular discount chain store. The purpose of the marketing campaign is to increase awareness and to persuade more locals to use the WeChat payment app.
Alipay has also adopted a similar tactic in Thailand. Sun 108, Thailand’s leading vending machine operator have announced a deal with Alipay to install 24 vending machines around Thailand that would allow Chinese customers to pay through Alipay. While this number may seem modest, there are plans to increase the number to 500 within the next 3 years.
As the concept of “going cashless” heats up in Chinese society, the country’s two leading mobile payment giants, WeChat Pay and Alipay, have pushed out marketing campaigns to further promote their respective payment apps to be the top destination for Chinese consumers looking to settle their cashless deals. Learn more from here.
Targeting Chinese dollar overseas
A factor that runs heavily in WeChat Pay and Alipay’s favour is the rising economic might of China. With a burgeoning middle class and more disposable income, Chinese travellers are flocking overseas in droves. One estimate has projected that Chinese tourists would spend over US$255 billion (S$347 billion as at time of writing) by 2025. This offers an incredible opportunity for WeChat Pay and Alipay to capitalise on.
However, as seen above, capturing the Chinese dollar is ultimately not the end goal for both payment companies. While it serves as a tempting bargaining chip that WeChat Pay and Alipay can use to persuade local businesses to adopt their payment modes, it is just a means for both companies to crack open these local markets. As it stands, both WeChat Pay and Alipay already have a foot in the door, whether or not they can fully capitalise on that would be fascinating to watch. It is expected that with the drive to expand overseas, we would be seeing many more instances of WeChat Pay and Alipay collaborating with local players.
About FOMO Pay Pte. Ltd
FOMO Pay is the first authorized WeChat Pay & Baidu Wallet partner in Southeast Asia, and was selected as one of the TOP 100 Asian Companies by E27, TOP 100 Startups by Red Herring Asia, and Top 8 by DBS’ FinTech Accelerator Program. FOMO Pay provides a one-stop solution for local merchants by facilitating payment collection from the China market, including Chinese tourists. This comprises of online/offline Chinese payment modes, such as WeChat Pay, Alipay and Union Pay. FOMO Pay’s business solution serves clients from a wide range of industries, including the telecom, publishing, tourism and hospitality, F&B, education and retail industries.