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Stripe Makes Cross-Border Purchases Easier for Chinese Consumers

Partnerships with Alipay, WeChat Pay eliminate a payment hurdle

July 11, 2017 | Retail & Ecommerce

Digital payment services in China are increasingly wending further from home as they seek to expand into foreign markets. This week, platforms Alipay and WeChat Pay took another significant step in that direction through a partnership with Stripe, a US-headquartered firm that offers a service similar to PayPal’s that gives both merchants and individuals the ability to make online payments.

Through the partnership, anyone who uses Stripe will be able to accept payment via both Alipay, operated by Alibaba affiliate Ant Financial, and WeChat Pay, the payment service owned by Tencent. In other words, the agreement gives merchants who use Stripe the ability to process payments made using either of China’s two most popular digital payment services.

That means that consumers in China—where credit card penetration remains relatively low—will have a much easier way of paying for purchases from vendors in any of the 25 countries in which Stripe operates. According to projections from Mintel, cross-border B2B and retail ecommerce sales in China were estimated at RMB626 billion ($94.23 billion) in 2016, and are projected to hit RMB1.28 trillion ($193 billion) by 2021.

For Stripe, the partnerships were a no-brainer.

“The Chinese market accounts for half of mobile wallet spending globally, and you can’t ask for better partners [than WeChat and Alipay] when it comes to the reach and spending power they unlock,” Stripe co-founder and president John Collison said in an interview with the South China Morning Post.

Data from Analysys International Enfodesk backs up Collison’s claims. The firm reported that Alipay accounted for 54.1% of China’s mobile payment transaction value share in Q4 2016, while Tenpay (the digital payment service from Tencent which includes WeChat Pay) made up 37.0% of transaction value share.

Mobile Payment Transaction Value Share in China, by Service Provider, Q4 2016 (% of total)

Additional research from Analysys International Enfodesk found that Tenpay boasted 838.3 million active mobile payment app users in China during Q4 2016. (WeChat Pay itself claims to have more than 600 million users.) Alipay was in second place, with 432.0 million users.

The partnerships won’t do much for getting Stripe into the Chinese market; the firm is likely hoping that giving potentially more than 1 billion consumers an easier way to make purchases from its clients will end up benefiting it in the long run.

This isn’t the first time Chinese payment companies have made forays into foreign markets. In May, Alipay brokered an agreement with US-based point-of-sale (POS) terminal provider First Data Corp. that gave its users the ability to make payments to some 4 million merchants in the US. The same month, Tencent made a similar agreement with US-based digital payment service Citcon to make WeChat pay available in the US.

However, these US partnerships were designed more with Chinese tourists in mind than anything else. “We’d rather focus on [Chinese] travel consumers being accepted at the POS, instead of coming in and saying to an American consumer here, ‘Why don’t you use Alipay right now?’” said Souheil Badran, president of Alipay North America, in an April interview with eMarketer.

Rahul Chadha

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