As China's outbound tourism rises, mobile payments will be key to capturing Chinese tourists' spending
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Chinese outbound tourism rose to approximately 81.3 million trips in the first half of 2019, up 14% year-over-year (YoY), per the Chinese Tourism Academy as cited in a report from Alipay and Nielsen, presenting payments providers with a valuable chance to rack up volume and build loyalty.
And considering the most popular factor that affects Chinese tourists' overseas shopping habits is the payment method (37%), which just beats out product quality (36%) and price (36%), payments companies' operations may matter as much as which merchants they work with.
Forty-four percent of Chinese tourists in some popular travel destinations like the UK, Singapore, and South Korea use mobile payments most often while just 13% of their general tourist populations do the same, suggesting that accepting mobile payments internationally can help payments companies attract Chinese tourists' payment volume.
Both Chinese and international payments firms have much to gain from winning over Chinese tourists with international mobile payment acceptance.
Top Chinese payments firms have been chasing international acceptance in a bid to capture more volume and win consumers' loyalty. By being available at a variety of merchants overseas, Chinese payments firms can both garner tourists' international spending and possibly convince consumers to use their services more regularly, including in China, because they can rely on the services no matter where they're paying.
That's why Alipay and WeChat Pay, which dominate China's mobile payments market, have been working to expand their networks and why card network UnionPay is making an international acceptance push that's focused on its mobile payments service.
As international payments companies gain access to China, they should take advantage of their merchant acceptance networks to bring in volume. American Express and PayPal are on their way to operating in China, and a new trade deal between China and the US may make it easier for more firms to enter the market as well.
These firms will be dropped into a very competitive industry, but they may be able to attract Chinese consumers due to their established and extensive merchant acceptance networks: If these players can convince international merchants to accept mobile payments by talking up the value of attracting Chinese tourists, that would likely boost the payments' players volume in turn. Additionally, these companies need to ensure their payment options are available for use in mobile payment platforms that are already used by or easily accessible to Chinese tourists.
But payments firms interested in the opportunity must pay close attention as China limits outbound travel in the wake of the coronavirus outbreak. Travel and tours out of the country are being restricted, likely lessening the amount of payment volume available from tourists this year, especially since the outbreak is overlapping with China's Lunar New Year, which is traditionally a popular time for travel and spending.
This will not necessarily impact Chinese tourists' spending behaviors in the future, but payments firms would be wise to watch closely to manage expectations and see if any strategic adjustments need to be made.
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