China’s Cashless Kingdom Expanding Overseas 

China’s mobile payment has penetrated to every corner of people’s daily life across the country. With a smart phone in hand, you can finish literally every payment you come across every day. From luxurious brands to street vendors and nonnamed flower shops, payment through the third party is as valid as cash, only with faster and less of a hassle.

Research showed that the value of third-party payment reached RMB 57.9 trillion (US$8.5 trillion), and the mobile payment market was RMB 38.6 trillion (US$5.7 trillion), nearly 50 times of the US market. Alipay, one of the two most popular payment methods, bragged about its 450 million users, compared to Apple Pay’s pathetic 1.2 million.

Chinese Outbound Tourists

As the domestic market tends to be saturated, the expansion of mobile payment is seeking opportunities overseas. Known as the world’s most voracious spenders, 135 million Chinese outbound tourists spent a total of US$261 billion in 2016, according to World Tourism Organization.

So it makes sense for the two payment giants, Alipay and WeChat Pay, looking for overseas partners to promote themselves as a commercial solution.

Countries and regions like Hong Kong, Thailand, Japan, and South Korea are most visited by Chinese. Thus, they were the first batch of territories to be conquered. Airports duty-free shops, restaurants, tourist attractions, and convenience stores have been targeted by Alipay and WeChat Pay for a while.

Soon, a group of Chinese experts from Ant Financial landed in India and taught Paytm how to succeed in the cashless market. They copied the Chinese model and introduced restaurants, food delivery, group purchase, car-hailing service and movie tickets to the platform.

By July, throughout Southeast Asian and European countries, Alipay and WeChat Pay has connected with over 120,000 and 130,000 establishments respectively.

Local Overseas Users

After accomplishing these top priority, the second step is to develop a partnership with local third-party payment companies to take over the local overseas users. In the last few months, Alipay’s operator Ant Financial has aggressively invested in East, South and Southeast Asian countries.

Ant Financial’s overseas expansion strategy is not hard to spot. First, it targets countries with a large population such as India and Indonesia. It somehow eliminated America due to its heavy penetration in credit cards. Brazil is also not an ideal choice regarding its unstable economy.

Second, Ant Financial obviously bet on developing countries where their economy is similar or worse to China, so they can just copy the successful model. Reality told them that the more popular the credit card payment is in a country, the less chance it will convert to mobile payment.

With these principles in mind, since 2015, Ant Financial invested a series of local e-wallet and fintech startups including Paytm (India), Kakao Pay and K-Bank (South Korea), Mynt (the Philipines), Ascend Money (Thailand), HelloPay and M-Daq (Singapore).

India’s Cashless Revolution

Take India for an example. India is far behind in banking system. According to latest data released by Reserve Bank of India, by February 2017, India has issued 29 million credit cards and 840 million debit cards. In 2015, China had 432 million credit cards and 5 billion debit cards. Since the two country’s population is close, we can roughly calculate that China’s number of credit card issued per capita in 2015 is 15 times more than India, and six times more than India in debit card.

The small number of bank card issued in India gives mobile payment a bright future and a broad stage. In addition, Chinese mobile phone brands like Huawei and Xiaomi have been building more and more factories in the country, selling local Indians cheap and quality smart phones. The popularity of smart phones provides a crucial hardware for mobile payment.

The cooperation between Alipay and Indian e-wallet Paytm dated back to 2014, when the founder Vijay Shekhar Sharma visited Alibaba’s founder Jack Ma in Hangzhou. By September 2015, Alipay and Ant Financial became Paytm’s biggest investors with up to 40% sharings.

Soon, a group of Chinese experts from Ant Financial landed in India and taught Paytm how to succeed in the cashless market. They copied the Chinese model and introduced restaurants, food delivery, group purchase, car-hailing service and movie tickets to the platform.

By April 2017, Paytm released that its total user number reached 220 million, ranking the third in the global market after Alipay and WeChat Pay.

Except for direct investment in partnered companies, Chinese payment giants also export necessary technologies and share marketing and operational experiences in this area. It’s no doubt that the expansion of Chinese cashless method greatly improves these countries’ mobile payment development.

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