China’s WeChat looks to expand payment app globally
WeChat, China’s most popular social media and messaging service, is looking to develop its payments service in the United States and Europe, where it hopes to attract new advertisers.
Owned by Tencent Holdings, WeChat is considering opening offices in Britain and another European location, alongside its presence in Italy. Tencent, which has an office in San Francisco, is also planning to expand its WeChat team in the U.S. to work with advertisers and payment providers.
“We needed to make a step closer in serving European brands,” said Tencent Europe director Andrea Ghizzoni.
WeChat, which also hosts pages for businesses, has more than 889 million users in its home country, yet remains largely unused in other parts of the world.
It is not the first time WeChat has attempted to win over Western users. In 2013, the app hired soccer star Lionel Messi for a high-profile campaign outside of China. “There were lots of downloads” of the app, said Ghizzoni. But few users stayed with it.
WeChat is now focusing on business-to-business uses, encouraging Western brands to sell products on the app. The service is courting high-value
brands in Britain and Italy, Ghizzoni said on Bloomberg Television. Burberry and Chanel are already high-profile WeChat ad advertisers.
In Europe, the focus is first on fashion and luxury goods, and will expand to travel and broader retail services. WeChat is hoping its expansion in Europe lure more highprofile brands to the platform, not only to reach consumers in China, but also Chinese tourists visiting Europe.
Goldman Sachs estimates that 220 million Chinese tourists will travel overseas by 2025, up from 120 million in 2015.
“Tencent could be following Chinese travelers to Europe and the U.S., as many of these consumers are going overseas for shopping,” said Marie Sun, an analyst at Morningstar Investment Service. “It would make sense for brands to advertise on WeChat, which is a large and effective platform.”
Tencent’s payment business is booming, with average daily transactions topping 600 million in December. Chinese customers are using the service to pay for everything from ride-hailing services to restaurant takeout orders.
But while WeChat has been one of the leading providers in offering chat-based payment systems, it faces increasing competition from global competitors.
Facebook, which owns WhatsApp, has been expanding its payments offering within its messaging apps, while Alibaba Group’s finance affiliate has been busy pushing Alipay in Europe.
In August, Ant Financial, Alipay’s parent, announced a partnership with Ingenico Group, a French payments group, to allow Chinese tourists to pay for goods in Europe through the group’s ewallet platform.
“We are talking to different payments institutions in Europe,” said Ghizzoni, “in order to integrate them into WeChat.”
Ghizzoni flagged the high-profile British payments industry as a major reason for setting up in the country.
“Tencent could be trying to do what Alipay is doing,” said Sun, “but there’s much more uncertainty in terms of when the business could take off, as it would need to overcome many regulatory hurdles.”