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.
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).
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 jewellerly 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.
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
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.
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.
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.
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.
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.
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.
