How Did Alipay and WeChat Pay Unlock New Benefits for Foreign Users?

Starting last week, foreigners were enabled to link their international cards to WeChat Pay and Alipay, China’s two dominant payment apps. This is big news for anyone planning to visit the Middle Kingdom, as it allows tourists to conduct cashless transactions as conveniently and seamlessly as locals do.

In this overview, we explain why overseas shoppers had to wait for this update for so long, list the credit card brands to which it applies, and share insights into what it could potentially mean for local commerce. Keep reading for all the exciting details!

A Glimpse at Mobile Payments in China

Before we delve into reviewing the newly released updates, let’s take a moment to take a look at the big picture and see why mobile payments play a critical role in Chinese commerce.

If you have visited China recently, you probably know that many local stores and establishments don’t accept cash. This is mainly due to the country’s lasting ambition to become a cashless society, which was further accelerated by the COVID-19 outbreak.

Such impressive growth is largely attributed to two competing payment apps:

• Alipay originated in 2003 as an online payment solution for the Alibaba eCommerce website. In 2008, Alipay introduced its mobile wallet and expanded its services beyond Alibaba products, becoming a widely used payment app.
• WeChat Pay. Initially launched as a chat application in 2011, WeChat has gradually become a super app that features food delivery, taxi services, an entertainment booking system, shopping, and its own mobile wallet - WeChat Pay.

As of 2022, Alipay had around 54% of China’s market share, whereas WeChat Pay had approximately 42%, making both apps giants in the local mobile payment sector.

However, despite such significant success and influence throughout the years, both apps were only catering to users with Chinese bank accounts, which made them inaccessible to tourists and short-term residents. Find out the reasons behind these limitations below!

Why Couldn’t Tourists Use WeChat Pay & Alipay Before?

Until recently, the registration process for both Alipay and WeChat Pay involved verifying the user’s identity by linking a Chinese national ID and a valid local bank account, which limited access to the country’s citizens and permanent residents. Despite increasing demand from foreigners, these rules were in place for multiple reasons, including:

• Authentication challenges. The identity verification procedure is more complex for foreign users due to differences in authentication systems and documentation across countries.
• Compliance complexity. Local mobile payment apps have to adhere to China’s strict financial regulations, which complicates parallel compliance with international financial regulations for non-resident users.
• Tax implications. Extending payment services to foreigners requires additional tax and regulatory considerations.
• Global pandemic. China was one of the biggest epicenters of the COVID-19 outbreak, making it essential for mobile payment service providers to focus on accommodating local users rather than making efforts to appeal to a foreign audience.

Overall, restricting the availability of mobile payments through Alipay and WeChat Pay to local users was mainly done to provide robust security, ensure regulatory compliance, and mitigate fraud and money laundering.

Everything You Need to Know About the Updates

Fortunately for those traveling to China after the end of July 2023, the local mobile payment giants have found a way to cater to short-term visitors without compromising the apps’ security and convenience. Here are the newly announced conditions:

New WeChat Pay Rules for Foreigners

Since the update went live, any international user can link a Visa, Mastercard, or JCB card to the WeChat Pay wallet and verify their identity by uploading photos of their passport to the app. It is also now possible to use a foreign phone number to receive verification codes needed to activate the account.

Yet, certain features will remain unavailable to tourists. For instance, they won’t be able to experience the digitized Chinese hongbao custom, which entails sending or receiving digital versions of red envelopes containing money. This feature was one of the main drivers of WeChat’s early adoption. Besides, foreign users cannot send, as China strictly regulates capital flows across borders.

WeChat Pay has also set spending limits for foreigners that are as follows:

• ¥6,000 per transaction
• ¥50,000 per month
• ¥60,000 per year

What’s more, while transaction fees are waived for payments below ¥200, any amount above this threshold will incur a 3% fee. As for the exchange rates, they will be determined by the card organization and issuing bank.

Alipay’s Updated Conditions for Tourists

In its statement announcing the new rules for linking international cards to the app, Alipay highlighted that as such major events as the Chengdu Universiade and the Hangzhou Asian Games are approaching, an increasing number of foreigners will be visiting China and relying on mobile payments for their daily needs.

To cater to these needs, Alipay, as the official payment partner of the Hangzhou Asian Games, will now be accepting Visa, Mastercard, JCB, Diners Club, and Discover cards from foreign users, with the same 3% fee applying for transactions over ¥200.

How Will Businesses and Consumers Benefit from the New Rules?

Without a doubt, Alipay’s and WeChat Pay’s recent developments mark a significant improvement in the payment experiences of foreign visitors in China.

What’s more, according to Venetia Lee, the general manager for Greater China at Ant Group, the mother company that owns Alipay, the collaboration between the payment app and international cards aims to not only enhance the experience for international travelers visiting China but also to create new business prospects for merchants by enabling them to appeal to a wider audience.

Lee emphasized that, given the anticipation of rapid growth in the global travel sector, the new service is set to facilitate a seamless and rewarding experience for consumers and SMEs alike, enabling them to make the most out of digital payment capabilities.

All in all, the new collaboration of Alipay and WeChat Pay with international cards offers plenty of opportunities for Chinese commerce as a whole to thrive and foster stronger connections with international customers.

As a result, it is safe to say that this initiative fully aligns with China’s greater agenda, which involves modernizing payment systems, achieving a cashless society, promoting business growth, and making transactions more accessible for both domestic and international consumers.