How Alipay, WeChat Pay's rise in the West helps other mobile wallets
SnapPay has grown rapidly in its role as an acquirer and payments gateway for Chinese mobile payment acceptance in North America, and it is ready to show merchants the next step.
In bringing Alipay and WeChat Pay to merchants in Canada and the U.S., the Toronto-based company is illustrating how important — and technically straightforward — it is for merchants to accept all payment types and begin embracing mobile for its ability to do so.
Alipay and WeChat Pay aren't just the favored payment method of Chinese tourists. They are also inherently mobile, and if SnapPay can set up merchants to work with these two wallets, it opens the door to a more fully digital merchant relationship.
"Mobile payments have been pretty nascent for quite some time, which is true for a lot of payments technology in North America over the last decade or two with Near Field Communication and EMV chips," said Chris Renton, chief growth officer for SnapPay, which also operates as an acquirer for UnionPay payments.
"What is different this time is that the revenue opportunity is quite high in a time of declining brick and mortar sales and increasing e-commerce sales," Renton said. "That is why this technology is going to really take off from a mobile perspective, and for the merchant it is complementary to other mobile payment technology like Apple Pay or Starbucks."
The numbers bear out the revenue potential, particularly in the case of accepting mobile payments from Chinese tourists and residents. SnapPay cites research stating 32 million tourists traveled to North America in 2017 and spent $132 billion U.S. dollars while here.
SnapPay says that as many as 95% of Chinese tourists are willing to use mobile payment methods they are familiar with in China when travelling overseas.
Most recently, SnapPay provided the technology for Canadian grocery chain FoodyMart to accept the Alipay wallet from tourists. But it doesn't happen simply by connecting an Alipay or WeChat Pay enabled QR code reader to a merchant terminal.
"That is not the field of dreams," Renton said. "If you have acceptance at your business and no one knows it is there, you are not going to generate much revenue."
In that regard, SnapPay spends a lot of time and money on marketing the acceptance of mobile payment methods. It puts brick-and-mortar merchants in a position to advance multi-channel communication and payment acceptance.
That sort of pitch makes SnapPay's offering stand out far more than simply enabling Alipay and WeChat Pay in North America, said Thad Peterson, senior analyst with Boston-based Aite Group.
"They are providing merchants with the ability to accept any tender type in any use case, and that is a huge step forward in terms of removing friction in payments," Peterson said. "The mobile wallet is poised to transcend its original bridging function from a card form factor to contactless transactions, to something of a 'universal translator' for payments."
In looking at SnapPay's current acquiring and gateway capabilities, it's not hard to envision "it's possible that every tender type could be accepted by any merchant anywhere in the world" in the near future, Peterson added.
And SnapPay is trying to convince its merchant clients of just that.
"One of our marketing plays is that both of these mobile payment platforms from China are super apps in terms of usage and engagement," SnapPay's Renton said. "China evolved in such a way that it missed some of the intermediary steps with card and e-mail payments, instead using consumer social media engagement as a financial platform."
Renton says SnapPay's revenue has grown by more than 7,000% in the past year, and a main reason for that jump has to do with the marketing efforts and strategic locations for Alipay and WeChat Pay acceptance in North America.
"We look at luxury brands and everyday spends, in addition to high-volume tourist areas," Renton said. "Everyday spend is important because there are millions of Chinese who live in Canada or the U.S. and there are many Chinese students here as well."
SnapPay CEO Spencer Xu knows many other companies will be trying to integrate various mobile wallets into the core systems of merchants in Canada and U.S. in the future, and he feels his company provides something that large social media or wallet providers will want.
"A company like Ant Financial [parent of Alipay] may have global expansion plans, but our role is to help their brand by acquiring merchants," Xu said. "We get them into our system and focus on the marketing needed to drive the spending at these merchant locations."
For the most part, merchants are confident in the QR code technology as well as the speed and security of accepting Chinese mobile payments, Xu said.
"Once you make the payments with Alipay or WeChat Pay, it is immediately accepted," he added. "It is a direct debit from a Chinese bank account, and it is not delayed like a credit card payment."
In enabling Alipay or WeChat mobile payment acceptance at a merchant site in Canada or the U.S., SnapPay views only the merchant account and transaction amounts. The company does not see, capture or store consumer payment credentials or data.
Initiating a Chinese mobile wallet payment occurs through a QR code related to the transaction appearing on the merchant terminal screen or any consumer-facing screen that can be scanned by the customer smartphone. Or, it can occur in the opposite manner, with the consumer displaying a QR code unique to them and the transaction information that the merchant would scan.
"We want to drive the use and acceptance of QR codes technology because the Chinese use it as a habit," Renton said.
More importantly, merchants need to view mobile payments and customer interaction as the way to embrace international visitors and expand payment acceptance and, in turn, give both mobile and physical retail a major boost, Renton said.
"This is the critical way that retail needs to evolve to be able to capture an important sector of the global population."