China’s e-payment systems WeChat, Alipay dominate its cashless society. Can they repeat their success in Southeast Asia?

SINGAPORE: Like the thousands of Chinese tourists who chose to spend their Golden Week holiday in Singapore, Ms Leng Jiying, a 30-year-old PhD student from the city of Guangzhou, had been meticulously planning her trip in advance. 

She booked tickets for popular local attractions like the Singapore Zoo on travel portal Ctrip.com, and made payment using WeChat Pay – a Chinese mobile payment and digital wallet service on the WeChat super app. “It was cheaper and more convenient,” Ms Leng said.  

Also visiting the zoo during the national holiday period was Ms Zhang Huifang, a 44-year-old homemaker who had travelled to Singapore from Shanghai with her granddaughter. 

Like Ms Leng, she had also purchased tickets using WeChat Pay. “Using payment methods we already know makes everything easier,” she told CNA, adding that there was an added perk: lower ticket prices thanks to promotional deals and discounts that were offered on the app. 

She paid 336 yuan (roughly US$48) for a pair of tickets (one adult and one child) – as compared to the slightly higher price of 451 yuan if she had bought both tickets in person. 

USING CHINESE E-WALLETS AND APPS IN ASEAN COUNTRIES

China’s rapid economic growth and role as a leading mobile phone hub have transformed its domestic payment landscape quickly. Today it is the world’s largest cashless society where digital wallets and e-payment apps are used by the vast majority of shoppers every day to pay for items in person as well as online. 

Industry experts note that these digital payment methods have also extended abroad as more Chinese travellers venture to other countries in the region like Thailand, Malaysia and Singapore.

The two most widely-used Chinese digital payment platforms are Tencent’s Weixin Pay, often referred to as WeChat Pay and the Alipay service, operated by Ant Group.   

Alipay, with more than one billion registered Chinese users, launched in Singapore in 2015 and is widely accepted online and in stores by a wide range of merchants online and in stores in Singapore.
 
WeChat Pay started out in 2018 with just 600 local retail outlets and is now used by more than 100,000 merchants today, according to stats provided by the Singapore Tourism Board (STB). Despite being used interchangeably in overseas markets, Weixin Pay refers specifically to the Weixin ecosystem that Chinese travellers use to make payments in places like Singapore. Weixin is for Chinese users, while WeChat is for international users.

Chinese travellers mainly use the apps to shop and pay for food, as well as hotel bookings, according to official figures. Both apps have also been incorporated into Bangkok’s BTS Skytrain public transport system, reflecting Thailand’s keenness to woo the Chinese tourism dollar. 

Businesses in Singapore have also been reaping the benefits of accepting Chinese digital yuan. A spokesperson for WeChat Pay told CNA that overseas transactions made in Singapore during the Golden Week holiday in 2023 saw an increase of 44 per cent as compared to prior months. 

Adapting to the needs of Chinese travellers is crucial, said Ms Jesmine Hall, Director of Marketing Communications for the Raffles Hotel. 

In May, the hotel started accepting cashless payments on WeChat Pay and Alipay in its bars, restaurants, hotel spa and gift shop – as well as for suite stays. While the hotel declined to reveal official figures, it confirmed there had been a rise in the number of guests using Chinese e-payment methods.

Another Singaporean company that has benefited is local bike-sharing operator Anywheel, whose new mini program registered over 4,500 new users from China within its first month of launching in September. There were “three times more users registered with +86 numbers over a period of six months,” the company said, referring to China’s country code.

But it hasn’t just been big-name establishments that have been quick to accept digital yuan. Official statistics from the Singapore Tourism Board (STB) revealed that there were around 10,000 hawkers accepting payment on WeChat. 

Ms Rachel Chua, 50, who runs a drink stall in the Maxwell Food Centre, told CNA that Chinese tourists would use Alipay “even for something as small as 30-cent tissue packets. To draw their attention, she displays prominent WeChat Pay and Alipay signs at the front of her stall, she said. 

But some Chinese tourists, like Ms Li Xiang, 36, from Guangxi, who travelled to Singapore with her boyfriend during Golden Week, still rely on cash and coins to pay for their small purchases. “We exchanged some cash just in case. We can use WeChat and Alipay in the shopping malls but smaller places, like some hawker stalls, don’t accept it,” Ms Li told CNA. 

Mainland Chinese travellers continue to make up the lion’s share of foreign tourist numbers in many Southeast Asian countries, especially during peak holiday travel periods. 

Official tourist arrival figures for Golden Week have not yet been released but August saw a surge of Chinese tourist arrivals – more than 400,000 visitors into Singapore. Ant Group, which operates Alipay, reported a 60 per cent surge in overseas travel transactions during the Golden Week holiday which began on Tuesday, Oct 1.  

WeChat Pay also announced a rise in offline global cross-border payment transactions across 74 regions worldwide, by 69 per cent during this year’s Golden Week holiday, as compared to 2023. It also reported a 57 per cent rise in the number of participating merchants.

At a Weixin Open Class event held in late September in Singapore, where merchants within the Weixin ecosystem shared their experiences using WeChat to attract Chinese tourists, Tencent revealed a "295 per cent increase" in overseas WeChat transactions by mainland Chinese tourists between May and August this year.

In 2023, the group partnered with regional ride-hailing giant and fintech platform Grab to offer a special WeChat in-app feature allowing Chinese users to book ride-hailing services in more than 500 cities across eight Southeast Asian countries. 

For Golden Week this year, it teamed up with popular attractions like the Singapore Zoo, offering exclusive deals and discounts – which resulted in a 50 per cent increase in Chinese travellers, park operator Wildlife Reserves Singapore (WRS) told CNA. 

“Some merchants even told us that (Chinese) tourists were asking why they couldn’t pay with WeChat Pay as it’s their preferred method of payment,” said Mr Etienne Ng, Country Manager for Singapore and Regional Director for Southeast Asia at WeChat Pay, told CNA.

THE CHALLENGES OF CROSS-BORDER PAYMENT 

But even as Alipay and WeChat payments become more widely available across the region, industry experts have highlighted limitations faced by foreign users on the apps, as well as data security concerns. 

For starters, the apps can only be used by those registered under mainland China mobile numbers, putting foreign users at a disadvantage, said Mr Shen Rui, an Associate Professor at The Chinese University of Hong Kong, Shenzhen (CUHK-Shenzhen). 

“First of all, it’s the infrastructure,” Mr Shen told CNA, referring to Chinese mobile numbers, data roaming and domestic telecommunication systems needed to connect for the apps to work properly.

Data security was another concern, he said. 

“Who is the data sent to? (Does it go) back to mainland China or stay locally? These are all going to be sensitive issues,” Mr Shen said. “If mainlanders are using mobile payments in Southeast Asia, so be it – but if the locals (Southeast Asians) are using it … and China receives (their data), it will be unacceptable.”

To address such shortcomings, Ant International launched Alipay+, a wider cross-border mobile payment platform catering to global users, which already has 12 of its partner e-wallets enabled in Singapore, from destinations like Malaysia, South Korea, Philippines and more. 

“Southeast Asia has an exciting digital ecosystem,” Mr Edward Yue, the groups’ General Manager for Southeast Asia, Australia & New Zealand, told CNA. “With our (overseas) partners, we see many opportunities to further digitalise tourism to benefit both tourists and local businesses.” 

While governments, national banks and businesses across the region might be eager to tap into tourists’ digital yuan, doing so comes with challenges, some experts said. 

“With China's market becoming increasingly saturated, it is essential for WeChat Pay and Alipay to establish their presence in overseas markets … through strategic collaborations with local merchants and tourism authorities,” said Dr Vanessa Liu, an Associate Professor at the Singapore University of Social Sciences (SUSS). 

But unlike its domestic “homogeneous market”, each Southeast Asian country has different and diverse “customer demographics, distinct regulations and varying governance mechanisms for digital payments,” Dr Liu added.

She told CNA that if Chinese tech giants wanted to “successfully navigate” the regional market, they needed to “develop payment options and products catering to the specific needs of local customers” in each Southeast Asian country. 

“Complying with local financial licensing requirements and banking regulations” was also crucial for Chinese tech companies wanting to break new ground in Southeast Asia, and they had to be prepared for fierce competition on the ground, Dr Liu said. 

“They must remain vigilant against the competitive threat posed by local digital payment providers,” Dr Liu told CNA, adding that WeChat Pay and Alipay’s models and features could be quickly copied by local payment providers like GrabPay in Singapore and Indonesia’s GoPay digital payment app. 

“Competition does not cease at market entry. Continuous innovation is imperative for WeChat Pay and Alipay (in Southeast Asia). They must consistently enhance their offerings and introduce new features to stay ahead of local competitors … it will be key to maintaining their competitive edge and ensuring long-term success in the diverse and dynamic Southeast Asian market.” 

WeChat Pay and Alipay’s expansion could pose a threat to local payment platforms, Dr Guan Chong, an SUSS Associate Professor told CNA.

He also raised concerns about whether the Chinese tech giants would be able to contribute to local economies by creating jobs and tapping into local talent instead of introducing competition. 

“Are they creating more jobs? If they are, are they doing good to the local economy and the workforce? Or are they really creating jobs for us?”