The U.S. hospitality industry alone is a multi-billion market. While it primarily relies on the consumers overall leisure time and disposable income, there’s plenty more that businesses in this space can do to maximize their profit potential.
One such move is addressing how they interact with the rapidly expanding Chinese consumer market. It’s estimated that in 2018, Chinese consumers will account for 21% of all international travel spending. Over 3 million Chinese tourists visited the U.S. in 2016, spending a total of $33 billion, and it’s projected that by 2020, that number of travelers will double to 6 million. Growth in spending from these visitors is also predicted to double.
While these numbers are impressive, research shows that they could easily be larger if Western companies provided a mobile payment option, something that is largely unused by non-Chinese shoppers. For example, Nielsen recently released a research titled Outbound Chinese Tourism and Consumption Trends, and the survey shows Chinese travelers not only like the convenience, but also appreciate the exchange rate.
“According to the survey, Chinese tourists expressed ‘convenience, speed, and familiarity” (64%) as the primary reason for using mobile payment while abroad. Among other reasons, respondents also chose… ‘favorable exchange rate’ (43%).”
How Mobile Payment Works, And Why China Is Considered the First Cashless Society
Mobile payment is dominated by two platforms, Alipay and WeChat Pay, owned by two of the largest companies in China, Alibaba and Tencent, respectively. Together these providers have over a 90% market share and upwards of 1 billion users. Combined with the fact that 90% of Chinese travelers – when they’re overseas – prefer to use a mobile payment option, it’s time for Western companies to adjust.
Practically all Westerners understand the simplicity of credit card usage. But in China, this payment method never caught on to the extent that mobile payment did. Issues of trust and security overtook the benefit of convenience.
There were also cultural differences at play. As credit card users know, purchases are not deducted from money in your bank account. You make a repayment later on, in some cases with interest.
Cheng Lian, a research fellow at the Chinese Academy of Social Sciences explains that this didn’t sit well with Chinese consumers. “Traditionally, Chinese people didn’t want credit cards because they didn’t want to owe anyone money.”
In addition to this problem, a lot of Chinese shoppers didn’t feel comfortable giving the credit card numbers over the phone or online for the trisk of them being stolen.
Mobile payments stepped in and solved these problems, and today over $5.5 trillion in transactions in China are through mobile. When a shopper uses Alipay or WeChat pay at a brick and mortar store, they can either scan a static QR code at the counter or show their dynamic QR code in their Alipay / WeChat Pay wallet – which refreshes every 60 seconds – to the cashier to scan and complete the transaction within seconds
With the number of Chinese affluent travelers increasing year by year, and China becoming the largest outbound tourism country, Alipay and WeChat Pay are following the footsteps of their consumers overseas to make the payment experience as easy and comfortable as it is at home. Citcon brought the two solutions together on a single platform, so merchants can focus on their own business while enjoying the benefits of both and tap into the combined user base of over 1 billion Chinese consumers.
How the consumer pays with Alipay or WeChat Pay:
- Consumer shows the dynamic QR code on their phone to merchants
- Merchant scans the QR code, with the options for consumers to choose tip amount which is especially useful at restaurants, or merchants can turn off the function from the setting
- Consumer pays with Chinese Yuan from their bank account linked with their wallets, and enjoys the best on-spot exchange rate, without foreign transaction fee
- Complete the transaction within seconds
- Consumer receives an electronic receipt on their phone while merchants’ POS terminal prints out a paper receipt. Transaction details also available on merchants’ dashboard
- Merchant to be settled in local currencies (USD, Canadian dollar, Euro etc.) by Citcon. ACH funds to merchants bank account in local currencies
Mobile payment via Alipay and WeChat Pay is flexible and easy to use for almost any type of purchase. In fact mobile payments are used for all of the following and much more:
- Sending friends money
- Online transactions
- Paying for a cab ride
- Buying tickets for flights
- Making hotel reservations
- Making electricity and water bill payments
- Even making investments
Mobile Payments Do More Than Attracting Chinese Consumers
Providing a welcoming environment to Chinese customers in the tourism and hospitality space is just one reason to adopt mobile payments. But the truth is that merchants can not only expand their market share, they can also cut costs, increase security and speed up checkouts.
When it comes to international credit card fees, both the merchant and shopper might be in for a surprise. With Alipay and WeChat pay customers won’t have to worry about foreign transaction fee and excess fees, but get best exchange rate on the market as well as various discounts and rewards, and benefits to merchants are even obvious when they work with Citcon.
- Up to 40% lower rate compared against international credit cards
- Navigate around any language barriers during check out or during the sales process
- Speedy checkout process (especially helpful for F&B industry where there’s always a long line for payment) to improve operational efficiency and customer satisfaction
- No chargeback and zero fraud by design, higher approval rate and increased revenue (no card decline due to card acceptance, EMV standard, risk of fraudulent transactions)
- Easy to reconcile with the merchant dashboard that details the transaction history
- Easy to refund – simply find the transaction and tap “Refund” on the terminal, and the funds will arrive at consumer’s account in real time, compared against 15 days or longer when using credit cards
- Marketing capabilities – with 1 Billion active users, it’s easy for merchants attract more Chinese consumers by providing their familiar and preferred ways to pay, avoid the language barriers, enhance customer engagement, and enjoy various marketing support from Alipay and WeChat Pay
- Merchants would be eligible to join instant cash back promotion campaigns funded by Alipay and WeChat Pay for free, in various holiday seasons throughout the year
- With Alipay’s geolocation-based “Discover” function and push notifications within the Alipay app, Chinese travelers can find merchants that accept Alipay, locate merchants nearby, receive promotional information, review tour guides, and make purchasing decisions. Through the same function, Alipay also enables local merchants to better target and connect with Chinese consumers.
- With WeChat’s official account, mini program and social advertisement, it allows merchants to develop their own China marketing strategy and target Chinese consumers by providing valuable and relevant contents and experience.
Citcon Provides Solutions for Early Adopters of Mobile Payment in The U.S. & Europe
At Citcon, we make catering to Chinese consumers easy by helping companies be mobile payment ready. The travel and hospitality industry has been eager to make travel and shopping a better experience for Chinese customers, and thus have been early adopters of the technology.
“The tourism industry is very enthusiastic and open to this new technology,” said Evelyn Yang, Head of Marketing and Communications at Citcon. “We work with different CVBs to help them facilitate their China readiness programs and share how Wechat Pay and Alipay can help merchants attract more customers, increase spending and drive growth.”
Thus far Citcon has partnered with more than 5,000 U.S. merchants, including top brands like Caesers Palace, Mandarin Oriental Hotel, DFS Group, Sheraton Hotels, Duty Free Americas and International Shoppes.
On top of payments, Citcon provides merchants an opportunity to run marketing and loyalty campaigns through its partner network such as Ctrip. These added solutions for businesses help drive omnichannel commerce growth in any industry.
By partnering with Citcon, you can run precise targeting campaigns, offer unique discount and coupon codes, and keep better track of consumer behavior in your CRM. These types of marketing opportunities are hard to find, especially when you want to get in front of a specific audience like Chinese consumers.
To start accepting mobile payments and attracting Chinese consumers to your business, call Citcon at 1-888-254-4887 or fill the contact form below.