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Ant Financial’s Alipay just reached a deal with US-based point-of-sale (POS) terminal provider First Data Corp. that will give its users the ability to make payments at some 4 million merchants in the US.
The move follows a recent trend among China-based digital payment services like Alipay that are establishing themselves in foreign markets such as the US by partnering with local companies. According to Alipay, the platform is now accepted by 100,000 merchants in more than 70 markets outside of China.
Earlier this week, Tencent announced it had allied itself with US-headquartered payment service Citcon to make its own digital payment service, WeChat Pay, available in the US.
But the goal of Tencent and Ant Financial is not to gain users among the US population, at least not yet. Instead they’re initially targeting the growing number of Chinese tourists traveling overseas.
“There are a lot of payment apps in the US already,” said Souheil Badran, president of Alipay North America, in an interview with eMarketer from April. “We’d rather focus on [Chinese] travel consumers being accepted at the point of sale, instead of coming in and saying to an American consumer here, ‘Why don’t you use Alipay right now?’”
According to a joint report from the China National Tourism Administration (CNTA) government authority and online travel agent Ctrip, the number of outbound tourists from China reached 122 million in 2016, up from 107 million two years earlier.
These travelers have a well-documented proclivity to spend heavily once they reach their destination. The World Tourism Organization reported that outbound travelers from China spent a total of $261 billion in 2016.
And much of that cash is being unloaded in the US. CNTA and Ctrip found that the US ranked fourth among the countries where tourists from China spent the most money, behind Thailand, Japan and South Korea.
Services like Alipay are attempting to make transactions by these tourists as painless as possible through collaborations with local companies like First Data Corp. Consumers in China are already used to making offline payments by scanning a merchant’s QR code with their smartphone within a payment app. Alipay plans to bring that same technology to the US.
“If I am a Chinese consumer coming to the US, I’ll pay with a QR code, no differently than how I would pay at a retailer in China,” said Badran of his company’s partnership with First Data Corp.
Although targeting US consumers does not appear to be Ant Financial’s first order of business, it’s a good bet that it plans on making Alipay available to non-Chinese consumers at some point.
The company made a clear move in that direction through its $1.2 billion bid for US-based MoneyGram, a payments processor that targets those without access to traditional retail banking services. Coincidentally, that’s the very same demographic that Alipay found to be fast adopters of its service in China.
eMarketer estimates that US adults will average 12 hours 7 minutes of media usage per day this year, up 3 minutes from 2016. Time spent with mobile will account for nearly all of the increase.
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