How does WeChat Pay work in Australia?

You might have heard that WeChat is a big name in Chinese social media, but did  you know that WeChat has an excellent payment system too?

Many would say that WeChat  Pay is the jewel in the crown in China's 'app for  everything'.

WeChat Pay is a popular payment method for payments within China, from China to other countries, and also by Chinese consumers in Australia to pay local businesses  from Chinese funds.

The Australian  payments landscape is becoming far more fragmented, with businesses now  offering more choices than just Visa and Mastercard payments. WeChat Pay and  other Asian wallets have become popular additions, enabling more consumers to  pay with ease.

In this article  we'll give you an insightful but easy to digest rundown on what WeChat Pay  is, how it works in Australia and how your Australian business can benefit  from this popular payment method.

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What is WeChat  Pay?

WeChat Pay is a digital  wallet and payment method that is offered as part of the Chinese WeChat app. Users can store their credit or debit card details in the digital wallet and  use this wallet to make in-store and online payments without presenting their  card or manually entering card  details.

WeChat Pay was launched in  China in 2013, three years after WeChat launched as an instant messaging  service. While WeChat Pay is newer than similar Asian wallets like Alipay,  it's a safe and fully fledged payment  network.

The payment process  starts when the payer scans a WeChat Pay QR code from the WeChat Pay app. The customer initiates the payment and completes verification such as a pin or  facial recognition transaction. Payment details are encrypted for privacy and security purposes, then sent from the merchant's point-of-sale system to  WeChat Pay.

This payment  functionality creates a familiar, trusted and seamless payment experience, given that users are already active in WeChat daily for other activities such  as social media and messaging. WeChat has over 1 billion monthly active users  globally, while in Australia 54% of all Chinese-Australians aged 18 to 44 use WeChat daily (Lowy Institute, 2023).

Australian businesses have opportunities to increase revenue and loyalty from a sizable audience with WeChat Pay. As of July 2023, there were approximately 152,000  Chinese international students in Australia, while 535,000 Chinese tourists  visited during 2023 (Statista, 2024).

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Why is WeChat Pay popular with Chinese nationals in  Australia?

You may have heard the hype already, but in case you haven't, here's some interesting stats on the popularity of WeChat Pay in Australia:

• Over 100,000 Australian retailers accept Asian wallets.

• 59 per cent of Australian-Chinese are more likely to buy from a  shop that offers WeChat Pay (The University of Sydney, 2023).

Those numbers are impressive, but there  are also other digital wallets with high usage. What's so special about WeChat Pay?

WeChat Pay is one of a  small number of digital wallets that makes it easier to spend Chinese funds  outside of mainland China.

One  problem that WeChat Pay solves is the lack of compatibility most Australian  business online payment gateways have with Chinese debit cards. While most  Australian debit cards are from the Visa and Mastercard card schemes, most  Chinese cards are from UnionPay, with UnionPay commanding 93% of card spend  in China (Datos Insights, 2023). Accepting WeChat Pay for online transactions  provides an alternative for these cardholders.

There  are restrictions in sending funds outside of mainland China. Chinese residents have an annual limit of $50,000 USD, however using an electronic  wallet such as WeChat Pay can bypass this  legally.

Also, international  payments in China can't be made online or in a bank app, they must be  conducted at a bank branch. The payer must provide proof of identification  and give reason why they're sending funds overseas. Yet another hurdle that  WeChat Pay bypasses.

While these hurdles are significant, another reason why WeChat Pay is so popular is its  familiarity. Instead of learning a new payment method in a new language, WeChat Pay enables Chinese nationals to use a payment method they were  already using in China.

How do  WeChat Pay in-store payments work?

WeChat Pay is popular for small/medium value in-store purchases due to its convenience.  For Australian businesses, it's an easy payment method to introduce. There are no initial setup costs as there is no electronic hardware. In place of an  electronic POS system, businesses are provided with a QR code which buyers scan from the WeChat Pay app.

The  transaction takes place in a matter of moments. After the QR code is scanned, the customer initiates the payment and completes verification such as a pin  or facial recognition transaction. Payment details are encrypted then sent to  WeChat Pay. Merchant's are provided with a portal where they can view the  number and value of WeChat Pay transactions.

If your business is  in one of the following verticals, you've got excellent opportunities to  reach Chinese customers with WeChat  Pay:

•     Restaurants, cafes and hospitality venues frequented by Chinese such as capital city central business districts and 'Chinatowns', university  suburbs, airports and popular tourist destinations.

•     Convenience stores, particularly in the capital city central business  districts as well as near universities.

•     Pharmacies and healthcare providers.

•     Public transport.

•   Luxury fashion and jewelry retailers.

•  Tourist attractions.

Onboarding your business is straightforward and requires less documentation than some other payment methods such as direct debit. Simply  submit Know Your Customer documentation and terms and conditions for  approval.

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How do WeChat Pay online payments  work?

Transactions occur in a similar fashion  to in-store payments, however most businesses don't require a QR code to be  scanned. The customer selects WeChat Pay as their payment method, initiates  the payment and completes verification such as a pin or facial recognition  transaction.

Payment details are encrypted then sent to  WeChat Pay. Merchant's are provided with a portal where they can view the  number and value of WeChat Pay transactions.

Businesses that provide essential services for international students can use WeChat Pay to  remove hurdles in making payment for the  following:

•     Rent

•     Utilities

•     Phone bills

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WeChat Pay can also be used for larger  payments such as:

•     Accommodation

•     Cars

•  Hospitals and other significant healthcare costs

The onboarding process is similar to that of in-store clients,  where Know Your Customer documentation and terms and conditions documents are  completed and submitted for approval. Your business is provided with an API  code which is added to your website to offer WeChat as a payment  option.

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How secure is WeChat Pay?

WeChat is a secure and trustworthy payment method for both customers and businesses and has compliance with international security benchmarks including the Payment Card  Industry Data Security Standard  (PCI-DSS).

Advanced multi-factor  authentication is used, including common methods such as password and SMS  verification, as well as biometric verification options including fingerprint  and facial recognition.

The  customer's payment and personal information is protected as this information  is encrypted once entered into WeChat Pay. This encryption process uses the  global-standard Advanced Encryption Standard (AES) which protects sensitive  information by transforming it into complex  code.

Tokenisation is also used to  protect bank account and card numbers, replacing these numbers with a unique  token. Encryption and tokenisation not only protect the consumer, they reduce  risks for the businesses by keeping this sensitive information out of  reach.

WeChat Pay is excellent at  managing risk with real time security monitoring, using machine learning  algorithms to identify suspicious behaviour and block transactions. They also  undergo regular audits and penetration testing by internal and external  experts.

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Alternatives to WeChat  Pay

There's no digital wallet  that's exactly the same as WeChat Pay, however AliPay has similarities and is regularly offered for Chinese customers alongside  WeChat Pay.

Like WeChat Pay, Alipay is a digital wallet originating from China. They're both popular in  China and with Chinese nationals in Australia. One difference we commonly  observe is that WeChat Pay is often chosen by consumers for small/medium  sized payments such as dining, clothes, even tickets and small bills. This is  often due to the convenience WeChat Pay offers as users are already  frequently using the app for messaging and social  media.

Alipay is often chosen to  make larger payments such as rent, education tuition, car purchases etc. This is often because Alipay is a stand-alone payments and financial services app, with more payment features such as rewards schemes where larger payments can  accumulate more points.

As these  digital wallets are both brilliant and have high usage, it's ideal to offer  both if you're really keen to look after your Chinese  customers.

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What else  can WeChat do for my business?

If you're really keen to start selling to Chinese customers, there's more you can achieve with WeChat than just using their payment platform. Australian  businesses are building their presence within the social media arm of the app, educating and engaging with Chinese  nationals.

These businesses  include Qantas, Westfield Australia, David Jones and Australia  Post.

Businesses can develop  mini-apps within WeChat which provide features such as customer support, shopping, order tracking, appointment booking and reservation management. As  these apps are made within WeChat, there is far less cost involved than  making a stand-alone app.

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How  your business can accept WeChat  Pay

Are you keen to increase  revenue and loyalty from Chinese customers? WeChat Pay can enable your  business to stand out from competitors by offering an easy way to make  purchases from Chinese funds.

At Novatti we help businesses throughout Australia and New Zealand to provide  familiar and easy to use familiar and easy-to-use payment methods for Chinese consumers. We've been listed on the Australian Stock Exchange since 2016,  have an Australian Financial Services (AFS) licence and the stringent monitoring of legal, compliance and risk teams.

Complete  the form below to arrange a friendly chat with our Asian wallets  specialists.

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Sources

Statista.  (2023). Number of visitors from China to Australia. Retrieved from https://www.statista.com/statistics/1315806/australia-number-of-visitors-from-china/. Accessed on 30 June 2024.

Lowy  Institute. (2023). Being Chinese in Australia Poll 2023. Retrieved from here. Accessed on 30 June 2024.

The  University of Sydney Business School. (n.d.). Marketing to the Million-Plus  Australian Chinese Consumers. Retrieved from https://sbi.sydney.edu.au/marketing-to-the-million-plus-australian-chinese-consumers/.  Accessed on 30 June 2024.

Datos Insights.  (2023). Mastercard and Visa gain global share amidst China's spending  slowdown. Retrieved from https://datos-insights.com/press-release/mastercard-and-visa-gain-global-share-amidst-chinas-spending-slowdown/.  Accessed on 30 June 2024.