Processing payments for Chinese tourists
A number of Alibaba’s (BABA) recent investments have been aimed at bolstering its mobile payments business. Through its affiliate Ant Financial, which is acquiring MoneyGram (MGI), Alibaba operates a mobile payment service called Alipay.
Alibaba is taking Alipay to several international markets as it expands its e-commerce operations abroad and also pursues the payment market for outbound Chinese tourists.
According to the UNWTO (United Nations World Tourism Organization), Chinese tourists traveling abroad transacted $261.0 billion in 2016, up $11.0 billion over their 2015 spending. Since 2012, China has been the world’s leading market for outbound tourists. The country sent 135.0 million tourists abroad in 2016, up 6.0% from the prior year.
Alipay versus WeChat Pay
Alibaba’s Alipay competes with WeChat Pay by Tencent (TCEHY). Alipay and WeChat are in the race to lead in the market of processing mobile payments for Chinese tourists traveling overseas.
WeChat Pay recently announced a partnership with Wirecard to allow European vendors to accept WeChat Pay as a payment option. The move is expected to streamline shopping transactions for Chinese tourists traveling to Europe (EFA).
Ant Financial also struck a deal with Wirecard to launch Alipay in Europe in 2015. Alipay also supports payments for Chinese tourists traveling to South Africa.
Alibaba and Tencent also inked strategic deals for their payment services in Southeast Asia, a popular destination for Chinese travelers. The chart above compares 2016 spending by outbound tourists from different countries.