What China’s payment landscape means for Australian SMEs

Alipay, WeChat Pay
Zhongshan,China-January 1, 2018:girl doing payment at a garment retailer via mobile.Wechat or Alipay for payment and money transfering via mobile becomes very common and popular in China,fast and safe.

The way people pay has changed. Where cash and cards were once king, mobile and digital payments now reign supreme. Emerging markets such as India and China have revolutionised the global payment landscape. With at least 300 online payment methods in use today globally, there is a growing consumer expectation that businesses cater to their preferred way to pay.

As such, the world is seeing a diversification of payment solutions and technologies. Developing markets previously dominated by cash have been the first to leapfrog to a mobile payment infrastructure, skipping the traditional plastic.

In Asia, alternative payment methods are rising to meet the needs of consumers online, led by eWallets and bank transfers. Most evident in China, app-based payments, such as WeChat and Alipay, via mobile devices have redefined the scope of what’s possible. Digital wallets are so popular among Chinese consumers that they represent more than a third of card-present purchases. Chinese consumers are choosing the seamless integration and trusted environment offered by these all-inclusive apps.

This momentous shift from cash to digital payments has broader implications for businesses globally, providing a different perspective on what a payment platform can and should be.

How Australia pays

In Australia, credit cards remain the top payment type for online shopping. This is largely driven by the country’s ‘tap-and-go’ culture, with Australia leading the world in contactless payment usage, with 325.4 million contactless payments made in 2017 – up from 258.6 million in 2016.

However, there are some signs that Aussies are starting to embrace other payment methods, with predictions that the e-commerce market will grow by more than 37 per cent over the next three years to be worth almost US$40bn by 2022.

The China opportunity for Australia

The diversification of payment methods may seem daunting to merchants at first. But managing complexity starts with the customer and establishing which methods serves that customer best.

As the world continues its digital trajectory, what can be learned from the confluence of channels and payment methods that are now available to Australian consumers? For merchants, it’s important to consider how physical stores, online, and app-driven device experiences best integrate into holistic experiences that require no stitching. It’s about providing payment options that serve ever-increasing convenience, without sacrificing essential security that customers demand.

For Australian businesses seeking to serve Chinese consumers, it’s about recognising and adapting to an entirely different set of expectations, and understanding that above all else, apps like Alipay and WeChat Pay represent a lifestyle choice for Chinese consumers and can help dictate the retailers they shop at and the brands they interact with whilst visiting. Serving them means, at a minimum, accepting Alipay, WeChat Pay and UnionPay, the dominant Chinese card brand.

This is certainly true of eCommerce and increasingly the case for serving Chinese tourists as they travel abroad in larger numbers. In Australia, Chinese tourists spend on average more than $8,000 on a trip, compared to $5,000 for other international travellers.

This presents a huge opportunity for businesses in Australia, which sees an influx of more than 1.4 million Chinese tourists annually. However, Australian businesses also need to adapt to the expectations of these visitors and match the ways they want to pay, in order to win over Chinese consumers.

Commerce is as ubiquitous as the air we breathe, with channels leading to a confluence that is now a global flood. It’s an exciting time for retailers, for consumers, and for the payments that connect us. It’s an exciting time to be in the business of retail here in Australia.

Alison Morris, VP Commercial APAC – Global Enterprise eCommerce, Worldpay