WeChat and Alipay’s overseas expansion proves difficult

Alipay and WeChat Pay dominated Chinese payments since their launches. The duopoly changed how Chinese people pay and shop on their mobile device. Over the last three years, the duopoly relationship stabilized with WeChat holding ~40% of market share.

 

Source: Analysys (1, 2, 3), Big data

Expand the battlefield to overseas market

Source: iiMedia Research, Sohu, Jianshu, Qianzhan, Baidu, Kuai Ke Ji, Sina

China has a population of 1.4 billion. According to Alipay’s December quarter 2018 financial report, there are 700 million Chinese Alipay users. Early 2018, Pony Ma, CEO of Tencent, announced that WeChat had hit the 1 billion user mark. As growth stagnates, both Alipay and WeChat must find growth overseas.

There were 140 million Chinese overseas travellers in 2018. Almost 10% of global travellers are Chinese. Chinese citizens in 2018 transacted about US$120 billion overseas. Alipay and WeChat are now in more than 54 and 49 countries respectively. They are waging a price war to attract users and merchants. For example, Alipay offers up to 50% off discount in some drugstores in Hong Kong; WeChat Pay, on the other hand, sends a customized red packet to the user who purchased in cooperated stores.

Overseas discount and services Alipay vs WeChat Pay

Apart from discounts and red packets, they are also providing tax rebate services for overseas Chinese travellers. WeChat helps the merchant to build mini-application to monetize their traffic by turning the offline traffic into online traffic.

Paris BHV mini-application in WeChat

In addition to organic growth, both Chinese giants have actively sought M&A and strategic partnerships in the region.

Alibaba fintech related overseas investment

Timeline		Country	Partner	Shareholding ratio	Approach of cooperation
Jan 2015	India		Paytm	40%	Invest + Tech support*
2015	Korea		K-Bank	N/A	Sponsor shareholder + Tech support
Nov 2015	Singapore		M-Daq	N/A	Invest
Nov 2016	Thailand		Ascend Money	20%	Invest + Tech support
Feb 2017	South Korea		Kakao Pay	20%	$200 million investment
Feb 2017	Philippines		Mynt	Major shareholder	Invest + Tech support
Mar 2017	Indonesia		Emtek	N/A	Joint-venture company
Mar 2017	Malaysia		Maybank/CIMB	N/A	Integrate
Apr 2017	Singapore		Hellopay	N/A	Merger (rename as “Alipay”)
2017	The U.S.		MoneyGram	N/A	(Failed)
2018	Pakistan		Daraz	100%	Acquire**
Mar 2018	Pakistan		Telenor Microfinance Bank	45%	Invest + Tech support
Apr 2018	Bangladesh		bKash	20%	Invest + Tech support
Jan 2019	Indonesia		Akulaku	N/A	Invest
Feb 2019	UK		WorldFirst	100%	Acquire

*Tech support means to apply Alipay’s technology to the e-wallets system to help improve the payment experience, etc.
**Acquire means to own 100% stake of the company.

Source: Reuters, Tech Crunch (1, 2, 3), Tech in Asia, CNBC, TechNode, The Edge Markets, e27, The Guardian, Tribune (1, 2), The Financial Express, PYMNTS, China Banking News

Tencent fintech related overseas investment

Source: Reuters (1,2, 3), CNBC (1, 2), Kr-Asia, Tech Crunch

Alipay and Wechat deployed various strategies to overseas market growth comprising investments, acquisitions and technical support. In fact, Alipay has successfully developed nine overseas e-wallets for local users in this way.

Alipay overseas e-wallet partner

Challenges ahead 

The battle between Tencent and Alibaba continues. In 2017, Alibaba invested in Mynt, the top mobile payment operator in the Philippines. Shortly after that, Tencent announced an investment in Voyager Innovations, the major rival of Mynt. Unlike the domestic market, the competition of overseas mobile payment market is far fiercer. There are around 40 e-wallets in Malaysia, 27 e-wallets in Singapore, about 37 e-wallets in Indonesia, 26 e-wallets in Vietnam, at least 17 e-wallets in the Philippines.

Early 2018, Alipay failed to acquire US-based MoneyGram because it failed to meet CFIUS (Committee on Foreign Investment in the U.S.) requirements. Nepal banned Alipay and WeChat Pay due to security concern. It is difficult for them to apply for local payment licenses.

The battle for payment domination between Alipay and WeChat Pay is now internationally. Some patterns that proved to be good in China do not work well overseas. They should be more innovative to get themselves adapt to the global market.