The Wechat Op­por­tu­nity

As Ten­cent’s Wechat and other Chi­nese fi­nan­cial com­pa­nies em­bark over­seas, lo­cal fin­tech providers have an op­por­tu­nity to part­ner up.


For Lon­don-based fin­tech provider Tra­monex, see­ing so many Chi­nese tourists vis­it­ing the U.K. meant a chance to join the suc­cess of Wechat Pay. But how to ac­com­plish this was less clear.

An es­ti­mated 300 mil­lion con­sumers in China have the Wechat Pay app loaded on their phones. Tra­monex and Hong Kong-based pay­ment gate­way part­ner Valoot Tech­nolo­gies have part­nered with Ten­cent’s Wechat to sup­port Wechat Pay mo­bile wal­let for Chi­nese trav­el­ers in the U.K.

“We were in a sit­u­a­tion not that many months ago that we knew this was huge, but didn’t know how to ap­proach it,” said Ovidiu Olea, founder and CEO of Valoot.

The part­ner­ship cre­ates a sce­nario in which Wechat op­er­ates like a card scheme, Tra­monex be­comes the ac­quirer and Valoot pro­vides the pay­ment gate­way and han­dles mar­ket­ing of the new ser­vice.

But the part­ners are con­strained in what they can do to bring Wechat’s

of­fer­ing to mar­ket in the U.K. “A lot of this will be driven by Wechat op­er­a­tor Ten­cent Hold­ings in China, as every de­ci­sion has to be run by them as they get their brand out to other parts of the world,” Olea said.

Be­cause Tra­monex had so many mer­chant re­la­tion­ships es­tab­lished and li­censes needed to process pay­ments in the U.K., it took only a few months to in­tro­duce a sys­tem in which Chi­nese con­sumers can scan a QR code sup­plied to a mer­chant and use it to trig­ger a Wechat Pay pay­ment.

While Tra­monex has ex­ten­sive ex­pe­ri­ence in in­ter­na­tional pay­ments, it will have to ad­just to the ac­quir­ing role with Wechat.

“We did our re­search to de­ter­mine the pat­tern of where Chi­nese tourists tend to visit through­out the U.K. and Western Europe as well,” said Tra­monex CEO Amine Ber­raoui. “Those are the mer­chants we are ap­proach­ing first on this, with the value propo­si­tion of serv­ing Chi­nese tourists and a lower price of pay­ment ac­cep­tance, com­pared to cards and other meth­ods.”

The tourists no longer have to rely on lo­cal cash or travel cards be­cause they can make pay­ments in ren­minbi, the na­tional cur­rency, through the Wechat app. Gen­er­ally, Wechat Pay users link to a pay­ment card—most likely a Union­pay card—or a bank ac­count.

Tra­monex and Valoot are smart to ad­dress the Chi­nese tourist with Wechat and their abil­ity to spend money in Europe, said Thad Peter­son, se­nior an­a­lyst with Bos­ton-based Aite Group.

“When you walk through Lon­don and look at all of the China Union­pay stick­ers, you know the Chi­nese are there in force,” Peter­son added. “Union­pay has been there a long time, so it’s not a ma­jor tran­si­tion to ac­cept those pay­ments through a mo­bile app over there.”

The Baidu Wal­let, op­er­ated through the mas­sive Chi­nese search en­gine com­pany and es­tab­lished three years ago as a ri­val to Ali­pay and Wechat Pay, also pro­vides ser­vice abroad for Chi­nese tourists.

Over­all, sev­eral com­pa­nies have sought part­ner­ships in the past few years to al­le­vi­ate fric­tion for Chi­nese tourists when mak­ing pay­ments.

Many of those part­ner­ships fo­cus around travel needs, such as pur­chases at air­ports, but the com­pa­nies in­volved are ex­pand­ing their op­tions. Late last year, Ten­cent part­nered with Star­bucks in China to al­low Wechat Pay users to pur­chase cof­fee at any of the nearly 2,5000 stores across the coun­try.

It’s that sort of ini­tia­tive that al­lows Tra­monex and Valoot to think about what could come of the part­ner­ship with Wechat Pay af­ter firmly es­tab­lish­ing the ser­vice in the U.K. The sky’s the limit, as far as they are con­cerned.

“Wechat ac­tu­ally has the op­por­tu­nity to be­come a world­wide e-wal­let in the fu­ture,” Valoot’s Olea said.

“Right now, we are es­tab­lish­ing a per­mit for Chi­nese go­ing abroad to use Wechat Pay, but other coun­tries like Hong Kong send vis­i­tors to the U.K. and Ten­cent re­cently re­ceived a stored-value li­cense to al­low con­sumers in Hong Kong to load their cards on Wechat.”

Such a sce­nario could emerge in other re­gions for Wechat, Olea said.

“If they put their minds to it, I think we are on the cusp of some­thing much big­ger than just Chi­nese tourists trav­el­ing abroad,” he added. “In the­ory, you could have the world’s first e-wal­let.”

Of all the mar­kets world­wide, the U.S. may be the most com­pli­cated, with dif­fer­ent reg­u­la­tions in each state, Ber­raoui said.

This is why Tra­monex is keep­ing its fo­cus firmly on the Euro­pean mar­ket at this time, he added. “We want to get trac­tion in Europe and then look at other ar­eas.”

If the part­ners be­gin to tar­get other mar­kets, Wechat’s QR code sys­tem may have the most luck in de­vel­op­ing coun­tries that don’t have es­tab­lished point of sale sys­tems with Near Field Com­mu­ni­ca­tion and other re­cent tech­nolo­gies, Aite’s Peter­son said.

“It would re­ally de­pend on the mar­ket, but there has to be suf­fi­cient de­mand for the mer­chant en­vi­ron­ment to sup­port yet an­other pay­ments plat­form,” Peter­son said.

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