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China's mobile payment tools poised to win more users in US despite trade row

2018-07-25

Source: Global Times    Published: 2018-7-24

China's third-party mobile payment tools are set to push ahead their services in the world's largest economy within this year although China-US friction tends to pose an obstacle to their potential acquisitions in the US, experts said.


Domestic technology giant Tencent Holdings aims to bring its third-party payment tool - WeChat Pay - to a wider presence in the US by connecting more merchants in the country in the second half of this year, according to a note Tencent sent to the Global Times earlier.


Liu Ying, a research fellow with the Chongyang Institute for Financial Studies at Renmin University of China, told the Global Times that as an emerging sector, mobile payments cannot avoid the negative effect brought by the ongoing trade tensions, which are in nature intended to contain China's further development in the high-technology sector.


Potential acquisitions by Chinese companies in the US payment sector are not likely to succeed amid the US protectionist sentiment, Liu noted.


In January, Ant Financial, the operator of payment tool Alipay and Alibaba's financial affiliate, failed to acquire US money transfer company MoneyGram International Inc after the Committee on Foreign Investment in the US rejected the proposal over security concerns.


However, such Chinese fintech companies won't halt their steps in expanding in the US, a key market for them as Liu noted, since it hosts a lot of travelers from China - more than 3 million per year and growing quickly, according to industry website paymentssource.com.


Plus, there are about 350,000 college students and a significant number of professionals from China who are studying or living in the US, said the report.


"Given the large bulk of potential users of Alipay and WeChat Pay in the US, the companies cannot miss the chance to promote their services in more cross-border payment scenarios this year," Liu noted.


"Besides, their partnerships with local companies can help expand the local market, thus winning more users among US brick-and-mortar merchants," she added.


On June 29, 99 Ranch Market, one of the largest Asian supermarket chains in the US, announced a partnership with Alipay, enabling customers to pay for items using the digital wallet starting from July 1. The service is supported by Silicon Valley start-up CITCON.


"The mobile payment market is not decided by US President Donald Trump, but by users who have a demand for a good payment experience," Liu stressed.


Wang Pengbo, a finance industry analyst at Analysys, told the Global Times Tuesday that the general context of the trade row has definitely had an impact on domestic payment companies going to the US market for acquisitions. But the bigger difficulty lies in local acceptance for such new things.


"In markets where financial systems are developed like the US and Europe, it's easier to export our edge in financial technology by working with local companies, while for those where financial systems are less developed like Southeast Asia, a digital wallet in a local version is more likely to be accepted," Wang said.


WeChat Pay entered the US market in 2016 and targeted services for Chinese tourists in cross-border payments. So far, WeChat Pay has been connected to more than 40 countries and regions, and it supports at least 13 currencies.


Neither Ant Financial and nor Tencent responded to an interview request by the Global Times as of press time.

Liu Ying is a research fellow with the Chongyang Institute for Financial Studies at Renmin University of China.

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