Mobile payment fuels tourism spending growth

Europe moves to embrace Chinese cashless fashion

Chinese travellers are spending more money than ever on overseas trips with 60 percent of visitors to Europe identifying mobile payment as their first choice, a new study revealed.

The Nielsen and Alipay report, titled 2018 trends of Chinese mobile payment in outbound tourism, finds that the average budget for Chinese tourists traveling abroad has increased to more than $6,026 per person in 2018. Over two-thirds (69 percent) of tourists use mobile payment when overseas, up 4 percent from the previous year.

There were more than 147 million Chinese tourists traveling abroad in 2017, with a total spend of $220 billion, according to statistics from China's Ministry of Culture and Tourism.

This presents merchants and tourist attractions with a huge opportunity to tap into this growing spend. For this reason, China's leading mobile payment supplier developed by Tecent, WeChat Pay, has recently teamed up with Paris-based department store Le BHV Marais, to help European businesses connect with the increasing number of Chinese tourists.

WeChat Pay offers Chinese customers at Le BHV Marais more diverse and personalized products and services, including an innovative pop-up store celebrating the Chinese New Year, while also giving them access to its iconic shopping experience.

"Smart solutions with WeChat Pay at their core have been brought to millions of offline stores across over 30 industries in China, and are common through out users' daily lives," said Li Peiku, president of international business at WeChat Pay.

"Many Chinese people have now long been accustomed to going out without their wallet. Together with our global partners, we hope to extend the convenient experience of WeChat Pay overseas, so that global businesses can share the dividends of China's growing outbound travel market."

Aja Godais, director of customer service and international development at Le BHV Marais, welcomed the strategic partnership, saying "this is a win-win situation, as the implementation of the recent initiative will surely enhance BHV's awareness in the Chinese customers but also it is interesting for WeChat Pay to be here because they have the visibility among the French brands."

Of the 2,806 Chinese tourists that took part in the survey, 93 percent would be likely to increase their spending if mobile payment were more widely accepted.

Nearly 60 percent of the overseas merchants surveyed who adopted Alipay said they experienced growth in both foot traffic and revenue after their mobile payment systems were implemented; 58 percent said that their foot traffic increased, and 56 percent reported improved sales.

Yan Hong, a Beijing resident who is currently on business trip in Paris, said she would like to choose Alipay or WeChat Pay while shopping in Europe if that service is provided.

"I think I do that out of habit, because when I am in China, most of the time I use mobile app to make my payment," she said. "I certainly believe mobile payment is likely to increase my spending as I usually have certain amount of local currency with me when I am overseas."

Industry experts say understanding the habits and preferences of Chinese tourists is crucial for European merchants if they want to tap into and capitalize on this lucrative business opportunity.

Roland Palmer, head of Alipay Europe, the Middle East and Africa, pointed out that as well as quality when it comes to purchasing, it is evident that the method with which Chinese tourists shop is equally important.

"Chinese tourists now expect the ease and simplicity of instant mobile payments. If European merchants can adapt to this, they will reap the benefits of having more Chinese customers as well as revenue," he said. "We are excited to see thousands of merchants accepting Alipay around Europe today and we expect continued strong growth in 2019."

While two major Chinese mobile payment giants are actively making inroads in Europe, Jeffrey Towson, a professor who teaches investment at Peking University, said WeChat's strength lies in its effective operating system for Chinese consumers' smartphones.

"Chinese tourists, especially millennials, live on their smartphones. The Chinese tourists you see around the world are glued to their smartphones, and WeChat is the center of that," Towson said.

However, Alipay, he explained, as part of Ant Financial, has a much more aggressive international strategy than Tencent.

"Ant Financial wants to service both Chinese and foreign consumers, and they want to offer everything from payments to money markets and wealth management," he said.

Towson believes that WeChat Pay should do quite well with Chinese tourists in Europe and everywhere else, with evidence showing that they have been doing well against Alipay over the past 3 to 4 years, taking almost half the payment market.

Nevertheless, he said "It is not clear how much WeChat Pay wants to service European consumers, if at all. That would be a much more difficult because WeChat doesn't have any natural advantages in expanding to European consumers."

Wang Qing, a professor of marketing and innovation at Britain's Warwick Business School, hailed WeChat Pay's recent move in Paris, but also shared Towson's view.

"WeChat Pay would enable retailers to offer Chinese tourists a better shopping experience, as Chinese consumers are more advanced in using mobile payment than people in Europe," said Wang, who holds an opinion that WeChat will remain a solution primarily targeted at Chinese consumers, with its main challenge being attracting users who are non-Chinese.