FB Pixel no scriptChina’s top two mobile giants take battle to tax refunds | KrASIA

China’s top two mobile giants take battle to tax refunds

Written by Sun Henan Published on   4 mins read

Alipay and WeChat Pay lure Chinese outbound tourists with favorable exchange rates and streamlined processes.

For millions of Chinese travelers around the world, the dilemma Mr. Ma faced in May when he ended his vacation in Berlin is a familiar one.

Lugging bags overflowing with proof of a holiday well spent, Ma had stumbled to the tail end of a quickly moving queue at an Alipay tax refund kiosk at the German capital’s international airport. The Chinese tourist headed that way after his tour guide suggested to him to settle his tax refunds on Alipay, as it’s faster than over the counter processing and offers a better exchange rate in Chinese yuan.

But just as he was about to settle the procedure, he heard a different tour guide whisper, “We can get our refund from WeChat. Its exchange rate is better.”

Unbeknownst to him, Ma was entangled in an intense battle between the two Chinese mobile payment giants for a slice of the growing pie in tourist tax refunds.

A rise in Chinese purchasing power has created a new competitive arena for WeChat and Alipay—they seek to address their users’ overseas mobile payment needs. Among other locations, this unfolds in international airports, where Chinese travelers often do last-minute duty-free shopping, grab a quick bite before their flights, and most importantly, get their tax refunds after their buying spree.

“Most airport operators tend to focus on short-term benefits when we reach out to them—they are concerned about how much their cut is in any partnership,” said Fan Wei, senior director of WeChat Pay.

“But we want them to see the long-term benefits. Providing mobile payment platforms that Chinese tourists are familiar with can enhance their experience. The user data and preferences collected by WeChat Pay can offer airports more insights, helping them carry out targeted marketing events to attract Chinese travelers.”

WeChat Pay is a feature offered by WeChat—the most widely used messaging and social media app in China, with 1.1 billion monthly active users as of the end of 2018. Alipay is a rival product operated by e-commerce giant Alibaba’s affiliate, Ant Financial.

Photo: Stock.tuchong.com

Rising tourism dollars

China’s expanding outbound tourist market is the world’s largest. Nearly 150 million trips were made by Chinese nationals in 2018, according to a report jointly released by China Tourism Academy and top travel site Ctrip in March. That’s a jump of almost 15% from the previous year.

The high volume of outbound tourists results in growing consumption. A report from McKinsey & Company expects 5.4% in annual growth in travel spending from Chinese tourists, from USD 242 million (RMB 1.7 billion) in 2015 to USD 315 million by 2020. The usage of mobile payments is becoming ubiquitous too. A survey by Nielsen and Alipay shows that more than two-thirds of Chinese tourists settled bills for their buying sprees with mobile phones last year, a rise of 4% from the previous year.

Alipay was the first to act and corral the potential cash cow.

The company had established early footholds at airports in Japan, South Korea and Southeast Asian nations—the three most visited destinations for Chinese tourists. In 2017, Alipay rolled out mobile payments services for more than 90% of merchants at Changi Airport in Singapore. Alipay also offers information of location-based promotions about shopping and dining at Changi.

WeChat Pay played catch-up by launching its “Flagship Airport” program in late 2017, with New Chitose Airport in Hokkaido as its first partner. Here’s how it works: With a tap on their WeChat app, travelers in partner airports can receive real-time flight information, pre-order and pay for goods at duty-free stores, as well as enjoy higher rates when they exchange for local currencies. In May, Amsterdam Airport Schiphol in the Netherlands became Europe’s first airport to join the program.

Tax refund red tape

Tax refunds at airports have become a key battleground for Alipay and WeChat Pay. Both platforms tout their quick, mobile, and efficient processes that address current pain points, pundits say.

Before Alipay and WeChat Pay jumped in, tax refund processes at times involved Chinese travelers waiting in line for an hour to get their forms stamped by customs, and possibly another hour’s wait to submit the paperwork to a tax refund counter to get their money. There have been occasional reports of Chinese tourists cutting queues, with fights breaking out.

To streamline the process, WeChat Pay and Alipay partnered with tax refund companies to enable Chinese tourists get their rebates settled in Chinese yuan and receive the money through the apps. Alipay and WeChat Pay say their services currently cover more than 80 airports around the world.

“The airport is a must-visit destination for every outbound Chinese traveler and it’s the ideal place to implement mobile payments,” said a manager of Alipay’s global outbound trip services who declined to be named.

“International airports also want to tap these solutions as they are proven to be attractive marketing channels to target Chinese travelers,” the person said.

The story first appeared on the social media blog “Zi Mu Bang” and was later published on 36Kr, KrASIA’s parent company. 

Low De Wei contributed to this report.

Contact the writer at [email protected]


Auto loading next article...