Alipay vs. WeChat Pay: Which Is Right for Your Business?
By Jamie Elgie
Alipay vs WeChat Pay: Two mobile payment options that dominate the Chinese payment space. These two wallets account for 94% of all mobile transactions in China, and with 776 million people using mobile wallets in China, it is safe to say these two payment options are loved and expected by Chinese consumers. But why should U.S.-based merchants take notice of these payment options?
By accommodating tourists and cross-border e-commerce shoppers from China, U.S.-based merchants can capture more revenue by gaining new customers, improving approval rates, and decreasing friction at checkout.
For example, a recent poll found that 93 percent of Chinese tourists prefer to use mobile payment options when traveling, and 73 percent said they would buy more if a mobile payment option was available. Something as simple as implementing two payment methods can transform your business into a welcoming shopping experience for an entire demographic.
Understanding Payments in China
The Chinese government is playing an active role in building a world-class infrastructure to support digitization as an investor, developer, and consumer. Led by Alipay and WeChat Pay, Chinese consumers go straight from cash to smartphones, skipping the use of credit and debit cards. Run by two of the world’s most valuable companies, Alibaba Group and Tencent Holdings, Alipay and WeChat Pay create a digital system that combines social media, commerce, and banking making payments a seamless part of shopping and living.
In contrast, the United States depends on banks for most non-cash payments, and all are tied to consumer bank accounts. With multiple firms involved in the process, from banks to credit card companies, to payment processors, the cost of transactions goes up with their handling and processing fees. Wallets and payments systems like PayPal, Apple Pay, and Google Pay are also connected to this system, but neither commands the market that AliPay and WeChat Pay do in China.
Alipay vs. WeChat Pay: A Brief History
Founded in 2005, Alipay has been around longer than its WeChat Pay competitor, which was added to the company’s suite of services in 2011. Alipay was originally created exclusively for use on the popular online retail site, Alibaba, but can now be used anywhere that accepts Alipay as a form of payment.
While WeChat initially started as an instant messaging service, the incredibly popular app now includes other services like financial transactions. Customers can send money to people within their WeChat circle and elsewhere. The app even allows users to send gifts to friends using the Red Envelope feature. The intent behind adding this feature was to allow people to instant message money to one another.
WeChat vs. Alipay: Security
Both services employ industry-standard security for transactions and use additional technology to ensure that transactions are secure. These can include biometric login requirements, passwords, and fraud alerts for potentially suspicious payments. These payments are flagged for review to prevent fraud.
While stopping payment on either platform is tough, it’s important to note that Alipay has more account limitations, including limits on the amount that can be withdrawn and sent. These restrictions can be limited with more intensive verification, but these limits could prevent fraud as well. Limits are placed on online payments, in-store payments, and remittances tied to the amount of verification on the account. WeChat Pay does not have general limits, however, personal accounts may have limits set.
Alipay vs. WeChat Pay: Fees
High international credit card fees can be a huge motivating factor for merchants to start implementing mobile wallet options, so let’s take a look at how Alipay and WeChat Pay compare with consumer and merchant fees.
Alipay and WeChat Pay are both free
Downloading the app or creating an account online is free for both providers.
Alipay and WeChat Pay fees
This is where the fees charged could potentially add up for your business, or your customers. For consumers, WeChat Pay starts charging a .1 percent withdrawal fee for transactions over RMBY 1,000. By contrast, Alipay allows much larger withdrawals, up to RMBY 20,000, before charging a .1 percent withdrawal fee.
For merchants, WeChat Pay’s average merchant processing fee is 0.6 percent and Alipay has an average merchant fee of 0.55 percent. To compare, the average credit card processing fee ranges from approximately 1.3% to 3.5%.
Related Read: Solved: What Does It Cost to Accept Mobile Payments?
How to Offer Alipay and WeChat Pay
Offering Alipay and WeChat is a great opportunity to attract new customers, improve customer experience, reduce international credit card fees, and many other benefits. While Alipay and WeChat Pay have some minor differences, overall merchants looking to better serve Chinese consumers should offer both as payment options.
To easily and quickly get set up with Alipay and WeChat Pay merchants can look into a global payment gateway partner like Citcon. Citcon is an integrated mobile payment platform that can connect merchants with more than 100 mobile wallets (including Alipay and WeChat Pay) through one single integration.
As the first authorized payment partner of Alipay and WeChat Pay in North America, Citcon brings mobile payment to the next level, enabling businesses to connect with customers beyond the payment experience. With our extensive experience and deep expertise in the Chinese outbound travel market, mobile payment, cross-border e-commerce, and cross-border marketing, Citcon is the one-stop solution for global businesses to reach millions of Chinese travelers and domestic consumers.
If you would like to learn more about the benefits of providing AliPay and WeChat Pay and how Citcon can help you effectively add mobile wallets to your site or stores, we’d love to chat with you! Request a demo or contact us today.
Related Read: 10 Questions to Ask a Global Payment Provider