by Mathias Michelangeli, Senior Business Developer, Limonetik
China has expanded into mobile payment faster than any other country in the world. And Chinese tourists stick to their habits when they travel.
According to Neilson, In 2019 69% of Chinese tourists used mobile payments (mainly Alipay and WeChat Pay) while shopping abroad, up 4% on the previous year. Merchants outside of China therefore have a strong incentive to offer this payment method. The main challenge is to entice Chinese tourists, create a competitive advantage, provide a tool to attract new customers who use mobile payment, reduce waiting time at checkout, provide omni-channel shopping and improve the customer experience.
In recent years, the travel habits of Chinese tourists have changed considerably. Data has shown they travel less in groups and visit fewer countries per trip (generally around four, including France, Italy and Switzerland). The result of this behavioural change is twofold: there are a growing number of individual travellers who prefer theme trips and an increase in “repeaters”, that is, tourists who follow the trends started by influencers. This hyper-connected customer base is, in fact, rooted in so-called e-tourism or M-tourism.
From M-tourism to M-payment
Ardent users of technology, these consumers have become “prosumers” – consumers who produce information, in this case, related to tourism. They express, exchange, and share their opinions on their smartphones over the social media, replacing the traditional not-very-interactive tour guides with smart devices, which have conversational capability.
Chinese tourists also prefer to make purchases using their smartphones. Many consider travelling with cash as impractical, not to mention unsafe. They prefer paying by mobile phone, which is more convenient and secure. In Nielsen’s 2019 study, New Trends for Mobile Payment in Chinese Outbound Tourism, when asked what criteria influenced their shopping habits abroad, Chinese tourists rated payment method at 37%, ahead of product quality (36%) and price (36%). In the same study, “89% of Chinese tourists said they would make more purchases if more merchants offered mobile payment solutions”.
Some merchants have incorporated these findings into their sales strategy. They are implementing solutions designed to satisfy consumers who are passionate about technology and maintaining their independence. McDonald’s, for example, has installed self-service kiosks for customers to order meals. Menus are translated into the local language and visual content is tailored to the culture of each country. This strategy solves the problem of the language barrier with staff, simplifies ordering and payment procedures, and increases the accuracy and efficiency of service.
At airports, kiosks have been set up to facilitate VAT refunds, thereby reducing waiting time at the counter. Another example is IPM, a business that provides interactive terminals called Easykiosks that can deliver public transport passes or SIM cards. The IPM system drastically reduces waiting time at checkout and improves the customer’s shopping experience. In the not-so-distant future, kiosks and terminals will all be offering new international payment methods through mobile payment. Or maybe the future is already here.
Digital marketing boosts mobile payment
By leveraging the power of digital marketing and the blend of media and interactive channels, merchants can increase their visibility and improve their sales tenfold. By informing Chinese tourists about promotions, discounts or coupons before they travel, merchants can spark the interest of new customers and draw them into their stores. The ideal strategy would be to create a buzz through digital marketing on Chinese mobile payment platforms, like Alipay, WeChat Pay, and Tencent, and establish a relationship of trust between the brand and the consumer. Through its geolocation service, Alipay, for instance, tells users about nearby merchants, promotional offers and product news.
Alipay and WeChatPay have also launched mini-programs that are comparable to resident applications. Users don’t need to download new applications because they are already integrated into platforms. These mini-programs handle everything from e-commerce to accessing Chinese government services.
For example, at Hong Kong International Airport, a mini-program allows customers to shop duty-free online, before arriving at the airport, and then pick up their purchases 90 minutes after ordering.
Customers can also use these mini-programs to order food for home delivery. Standard restaurant chain apps could eventually become redundant, as WeChat and Alipay have managed to bring the two together within their platforms. These mini-programs could become serious competitors to the conventional e-stores.
Mobile payment added to the value chain for a seamless customer experience
According to analysts at Gartner in The Market Guide for Digital Commerce Payments published in July 2019, providing a smooth payment experience increases conversion rates and provides an undeniable competitive advantage. To be sure, for outlets and stores to benefit from the sales potential from Chinese tourism, they must now offer omnichannel experiences including mobile payment – the payment method of choice for these customers – and target marketing campaigns accordingly.
With an incentive to appeal not only to Chinese tourists but others worldwide, the merchant network that accepts payments via QR code, NFC technologies, and electronic wallets is expanding. This trend will also lead stores to digitise their customer journey. Besides Alipay and WeChat Pay, other smart media platforms such as France’s Lydia and Denmark’s MobilePay are now starting to offer all types of payment method.
Focus on Chinese technology tools
Conventional Western social networks and media, such as Google, Facebook, Snapchat or Instagram, are blocked in mainland China.
Instead, the Chinese use WeChat (1 billion active users monthly in 2019), Sina Weibo (486 million active members) and Douban (320 million) as their primary source of information. A number of technological advances have changed the payment habits of Chinese consumers, urging them to adopt mobile payment directly and forgo the use of bank cards. With nearly 3.2 billion smartphone users worldwide in 2019, and a potential of 690 million Chinese who would use their smartphone daily to pay at a point of sale or an ATM, the tech giant Alibaba has been offering its own payment solution since 2004, Alipay.
Originally designed to facilitate transactions on the online auction site Taobao and on Alibaba’s e-commerce platforms, Alipay now manages a host of financial products and services, ranging from physical payment, to money transfer between individuals, to corporate funding.