Chinese tourists are increasingly traveling to various countries including the United States. Used to convenient mobile payment platforms at home, they expect the same user-friendly service abroad. The Chinese mobile payment platform Alipay decided to tap into this market and it now prides itself in partnering with over 4 million U.S. merchants.
Chinese tourists are changing the world
Chinese nationals constitute 135 million travelers yearly, spending $US261 billion. These figures are expected to be smashed year by year as Chinese tourists are having an increasingly massive impact on worldwide destinations. They make about 4.4 billion trips every year and have imposed themselves as the leading global outbound market. Since 2010, the number of international departures has been increasing in double digits.
Nonetheless, experts consider that the potential of the Chinese market is far greater. According to statistics, only 6% of the Chinese population own a passport. In a few years time, this figure is expected to soar. They are filling hotels, tour buses and cruise ships and overwhelming airports and train stations. At the same time, they are sending home pictures on social media platforms that do encourage their compatriots to join this global invasion.
Businesses worldwide rely on their spending as the Chinese travelers tend to spend double the international average. By 2021, Chinese tourists are forecasted to spend $US429 billion abroad. As a result, they can have a great impact on local economies and make various businesses knowing how to adapt to their consuming patterns more sustainable. To cater to their needs and desires, service providers are upping their game to create experiences.
The most prized destinations of Chinese travelers are Thailand, Japan, Singapore and the United States. Affluent Chinese tourists have shown a penchant for travels to Antarctica and the Himalayas too.
Targeting high-spending Chinese tourists in the US
An affiliate of the behemoth Alibaba BABA and owned by the financial services company Ant Financial, Alipay is continuously expanding itself in the US market. Partnering with Atlanta-based First Data FDC to facilitate payments through Point-of-Sale (PoS) platforms, Alipay has reached over 600 million users.
The simple reason for Alipay to strive to make a breakthrough in the US payment industry is that it wishes to target the high-spending tourists in the country. It is foreseen that Chinese citizens will be increasingly visiting the US as their income keeps growing. The middle-class segment is growing and Chinese nationals have been observed to increasingly decide to spend on experiences and integrate the luxury market too. Alipay hence aims at handling every aspect of the travel and spending of Chinese tourists in the US, be it for ride-hailing to purchasing luxury products. Hotel and restaurant reservations are equally included as part of the Alipay service.
Chinese tourists are viewed as a powerful economic force for U.S. retailers. In 2016, about 2.97 million Chinese tourists spent $US 33 billion in the country. This figure represents much more than that spent by any other nationality. Furthermore, worldwide, Chinese tourists are the ones who bought 32% of all luxury goods in 2017. They are avid of luxurious apparel, beauty products, and handbags. Shoes and jewelry are equally gaining much traction in the luxurious products segment worldwide. Facilitating payment for the Chinese tourists will undeniably boost the businesses of retailers and duty-free shops at airports.
Alipay is, however, not the only payment platform having infiltrated the US market. Chinese company UnionPay International has partnered with ACI Worldwide ACIW, allowing more UnionPay cards to be accepted by merchants at an international level. To date, more than 7 billion UnionPay cards have been issued worldwide.
Alipay will not attract many American users
Presently, Alipay is only linked to Chinese bank accounts. As it does not require the use of a credit card, payments can be made directly between bank accounts and retailers. In this sense, Alipay in all probability will not attract too many new American users even if Alipay could connect with bank accounts based in the US. Surprisingly, even familiar mobile payment systems such as Apple Pay and Samsung Pay have low adoption rates in the US.
American consumers are equally wary of overseas payment systems in a landscape where access to data and data security are fragile. Some American consumers have even expressed mistrust towards American companies such as Amazon, Facebook, and Google. Facebook, in particular, is highly mistrusted now after a scandal involving an alleged data breach of over 50 million accounts through a third-party app. As a result, betting on American users does not seem a fruitful initiative right away for Alipay.
Article published in EMV and Smart Payment Cards :
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