The Chinese social giant Tencent launched WeChat Pay International on February 25, 2016. As a digital wallet service that enables consumers to make an instant payment on their mobile device, which supports the transactions from RMB to nine other currencies (AUR, CAD, EUR, GBP, HKD, JPY, KRW, NZD and USD).
WeChat has convinced companies to create subscription accounts, service accounts, and WeChat shops. WeChat Pay is a large step closer to commercializing the platform, in providing both overseas vendors and Chinese tourists with an easier payment method.
1. Pay wherever you go
With over 600 million active users, WeChat Pay is evolving to support them with a simple feature for payments. While WeChat Pay is most efficiently and conveniently used locally in China, its use abroad is also steadily gaining in popularity. The feature will be further developed as WeChat encourages foreign vendors to apply for their own WeChat accounts and WeChat shops.
When tourists from Mainland China travel abroad, they often encounter problems regarding limited coverage from Chinese credit cards and banks. WeChat aims to solve this. Tourists will spend RMB directly from their WeChat accounts with WeChat Pay playing the middleman, taking care of currency exchange rates among partnering banks and vendors. So far, the accepted currencies include AUR, CAD, EUR, GBP, HKD, JPY, KRW, NZD, and USD. Additionally, the outgoing transfer fees will be covered.
2. Fast-track to building your WeChat fanbase
More good news for international brands: Tencent WeChat Pay promises that once a user makes a purchase from a brand via WeChat Pay, he or she will automatically become a follower of that brand’s WeChat account. So even if a consumer only completes one transaction, they will still receive all future updates from that brand’s WeChat account.
This new functionality offers brands a great opportunity to close the loop with consumers. Due to WeChat’s ability to spread content very quickly to large audiences, WeChat Pay offers international brands the opportunity to expand their business and track sales with digital content. Thus, brands on WeChat must calculate what type of content will appeal most to their audience and figure out how and when to drive them to the international stores.
The World Tourism Cities Federation predicts that 200 million Chinese will travel overseas by 2020, and estimates that Chinese tourists will spend about USD$229 million overseas in 2016. Considering the popularity of the digital payment in China, WeChat Pay would be an efficient method of obtaining revenue and exposure for brands.
3. Still in beta mode
The WeChat Pay international system is still in beta form, which means that the application feature for overseas vendors is not currently very user-friendly.
Currently, the largest obstacle is that after submitting an application, it can take “7-15 business days” for Tencent to reply to finalise the application.
4. Is all this fuss necessary?
For brands outside of China, is it necessary to go through all this fuss for the Chinese consumer? In 2015, Chinese tourists spent more than 200 billion US dollars abroad, and this number is reportedly growing as we see a sharp increase in the amount of overseas spending.
Source: World Tourism Cities Federation
Whether or not you choose to embrace WeChat Pay, digital payment via personal devices is already quite prevalent in China. A survey, conducted by Nielsen* in January 2016, showed that 86% of the respondents in China had used some kind of digital payment system, such as PayPal or Alipay for online purchases in the past six months.
For brands who want to succeed with WeChat Pay internationally, here are our tips for a successful launch:
- Good timing – CNY, Double 11 and Double 12 would be the time to jump into the market. Tencent will initiate big scale promotions with red packets, shake shake and Ka Bao (Coupon Package) functions, which would be open to all WeChat users.
- Technical Support – The practical WeChat Payment function includes not only the online API connected, but the offline store payment system also needs to be supported. Ensure that both transaction sides are ready when considering opening WeChat Pay.
- CRM Support – To ensure that users can receive feedback efficiently, a mature CRM system is essential for running a successful WeChat Pay account.
Are you ready to seize the initiative of WeChat Pay?
*Survey conducted by Nielsen