Western Retail Companies Need to Offer Mobile Payment Options – Or Risk Losing Chinese Consumers
The past few years retail companies in the U.S. and Europe probably noticed an uptick in sales from Chinese consumers. That’s because this demographic is traveling more often and spending more liberally on their trips. In 2016, they spent an average of $7000 per trip the U.S, twice that of their Korean and Japanese counterparts.
This has been the trend for the past decade, and the years ahead look just as promising. From 2008 to 2016, the Chinese share of luxury goods market spend tripled, and 75% of Chinese luxury spending happens overseas. Over the next five years it’s expected that Chinese consumers will spend $453 billion outside of the mainland, and by 2020 there will be an estimated 6 million Chinese travelers who visit the U.S.
But how much do retailers in Europe and U.S. know about Chinese consumer payment preferences? The countries in this part of the world are overwhelmingly a cash and credit card payment society. China on the other hand has been dubbed the first “cashless” society in the modern era, and for good reason. A report from iResearch showed, “that the mobile payment market in China reached $5.5 trillion in 2016, an increase of more than 175% year over year, and it expects the market to reach $8.0 trillion in 2017. By comparison, market research firm Forrester Research estimates the US market for mobile payments was $112 billion in 2016, a mere 2% of China’s market.
This cashless society almost exclusively uses two brands to execute their mobile payments, Alipay and WeChat Pay. Together these two mobile payment giants have over 90% of the Chinese market.
What Is It About Mobile Payments That Attract Chinese Consumers?
There’s some backstory that explains how mobile payments came to be the dominant form of purchasing in China, but first let’s look at how they feel about the need for mobile payments overseas.
The chart below shows that retailers who offer mobile payments are far more likely to receive business from Chinese consumers. Mobile payments made the top 5 list of needs for Chinese travelers, just behind perks such as accessible wi-fi and staff that can speak their language.
Most western businesses no doubt understand the need for those two services. It only takes a mildly experienced traveler to know how much of a necessity free wi-fi is, and how much comfort someone speaking your language can add to a shopping experience.
But there’s currently a significant customer service gap in the payment process. Accepting Alipay and WeChat Pay can easily put a retailer ahead of its competitor, and Chinese travelers are sure to keep that in mind on future trips where they’ll be more likely to spend their money at stores which took stock of their shopping preferences and actually did something about it.
Data from a survey of Chinese consumers released by Nielsen, showed overwhelmingly that they would be more likely to spend their money at a retailer that accepted Alipay and WeChat Pay. In fact 90% said they prefer to use mobile payments when traveling overseas, and 77% said they have spent more overseas using mobile payments in the past year than the previous year before that, suggesting some of the larger, more forward thinking companies are catching on.
The backstory of how mobile payments came to become so popular in China is that China used to be a cash society without a robust banking or credit and debit card services, especially in the less developed cities.
One company that researches this very topic wrote that, “China has a weak credit card culture that favors the adoption of alternative electronic payment solutions (such as mobile payments), which are considered safer and more convenient.”
Jack Ma, founder of Alibaba – which created Alipay – explained that, “When we created Alipay in 2003, we did it to resolve the issue of trust between people. And by resolving the issue of trust, we’ve also resolved the issue of payment.”
The Start of Western Businesses Accepting Alipay and WeChat Pay
According to JingTravel, which researches and writes about Chinese tourism and shopping behavior, “For a destination or retailer hoping to attract Chinese tourist dollars, implementation of WeChat Pay or Alipay is not a ‘feature,’it’s a necessity.” When you hear the situation explained like that from experts who know Chinese shoppers best, it makes you wonder if U.S. and European retailers truly understand the urgency in mobile payment adoption.
Today over 5000 companies have partnered with Citcon to provide this option for Chinese customers. Las Vegas, a popular travel spot for Chinese consumers, has over 850 merchants already accepting Alipay and WeChat Pay. Retailers such as DFS Group, Duty Free Americas, Kering Group, Pandora, Alex and Ani, APM Monaco, Stefano Ricci f have also adopted this new payment model, as have various outlets in New York, Los Angeles, San Francisco, Boston, Chicago and merchants located in San Francisco’s Pier 39 & Fisherman’s Wharf.
The largest brands in the largest cities are leading the way, but if that’s not enough to convince you, think about this: accepting mobile payments will actually save you money. Partnering with Citcon to make your place of business AliPay and WeChat Pay ready can eliminate up to 40% of the costs associated with international credit cards. It’s already a great investment since you’re bound to get more business from a growing Chinese consumer market, but when you throw in the savings it becomes an incredibly obvious business priority.
How Citcon Makes Your Business China Ready, While Saving You Money
Citcon offers the expertise and technical support you need to make sure your business is ready for Chinese consumers, whether they prefer to use Alipay or WeChat Pay.
Versatile POS Terminal
If you’re integrating a store-front property, our versatile POS terminal helps you process mobile payments so long as there is an internet connection. It’s as easy as entering the payment amount and scanning the customer’s mobile wallet. When Chinese consumers that see you offer this method of payment, they’ll feel much more secure and comfortable shopping in your store.
Easy API Integration
For businesses that already have a POS terminal, there’s no need to invest in a second one. Citcon will work to make it Alipay and WeChat Pay ready using a simple API call. Our API capabilities are also how we help businesses that are strictly ecommerce, or only make sales through a mobile app.
Lower Merchant Rate
On top of attracting more Chinese consumers and making their shopping experience better, partnering with Citcon also is financially beneficial for merchants. International credit card rates as unnecessarily high, and accepting Alipay and WeChat Pay with the help of Citcon can save you as much as 40% per transaction.
Providing mobile payment also means added security and more opportunities to reach your customer base. Here’s how:
Higher Levels of Security
With Alipay and WeChat Pay there will be no chargebacks or consumer fraud. If a merchant sells goods or services worth of $100, it’s guaranteed that you’ll receive the full amount. Merchants are not held liable for fraud when this payment method is used.
Expand Your Marketing Reach
Creating an official WeChat account is like having a Facebook page that can be used to get your products in front of their users. You’ll have full control of what messaging, marketing campaigns and content you want to show them. With over 1 billion active users, this capability could greatly expand your marketing reach.
Alipay provides similar marketing advantages. The Alipay Discover platform directly integrates with Alibaba’s travel business named Fliggy. If Chinese tourists are a growing part of your business you can drive traffic and steer them to your stores as they book their next trip on Fliggy. Using precise geo-targeting, the Alipay Discover platform lets its users know when particular merchants are close by. These merchants can send coupons, rewards and other messages, enticing them into their stores.
Start enjoying all these different benefits and change the way you attract Chinese consumers today. Our team is here to help. Call us at 1-888-254-4887, or fill out the contact form below.