Alipay and WeChat Pay could invade PayPal’s turf
Though PayPal (PYPL) may find a way to dodge competition for its Venmo service from Apple’s (AAPL) upcoming peer-to-peer (or P2P) platform, another threat is looming for the company from Chinese digital payment services.
Citcon, China Luxury Advisors (or CLA), and the Momentum Group (or TMG) have forged a partnership to enable North American traders to accept Alipay and WeChat Pay payments. These partners are eyeing the large opportunity that Chinese tourists to the US (SPY) present.
Chinese tourists to spend $85 billion in US by 2021
The integration that Citcon, CLA, and TMG are working on would allow Chinese shoppers in the US to pay for purchases in Chinese yuan and for the local vendors to receive these payments in US dollars. The partners view this integration as a vital step in streamlining the transaction process for Chinese tourists and American traders.
China sent 1.8 million tourists to the US in 2014. These tourists spent $21.1 billion in the country. The inflow of Chinese tourists into the US is expected to reach 7.0 million by 2021 with their spending hitting $85.0 billion, according to CLA.
A looming threat for PayPal
The arrival of Alipay and WeChat Pay in the format that Citcon, CLA, and TMG are pursuing could limit the payments that PayPal processes for Chinese tourists in the US. Thus, PayPal could face a tricky situation if the integration materializes.