Starting this week, 3,000 U.S. Walgreens stores, including locations in New York, San Francisco and Las Vegas, now accept Alipay, the mobile payment platform owned by Ant Financial, an affiliate of Chinese e-commerce giant Alibaba, according to a post on Alibaba’s Alizila news blog.
That number will increase to 7,000 by April, according to an email from Alibaba to Retail Dive. Each year, some 4 million Alipay users are in the U.S., and save on foreign-exchange fees when they’re able to use it, the company said.
Alipay is increasingly an option for Chinese travelers to the U.S. Last September, for example, cross-border mobile payment company Citcon and omnichannel platform GK Software partnered to bring Alipay and rival WeChat Pay for use by North American retail customers, according to an email from those companies to Retail Dive
For a few years now, Ant Financial and several retailers have taken note of the spending power of Chinese tourism, which surged during the recent Lunar New Year holiday.
"China has been the world’s number one outbound tourism country for five consecutive years, with spending from Chinese tourists abroad making up 21% of all tourism spending," Wei Jiang, Citcon president and COO, told Retail Dive in an email last year. "Understanding the consumer preference, making it easy and convenient for them to pay and keeping them engaged by leveraging the social and marketing capabilities are key for retailers to succeed with Chinese consumers."
It behooves retailers to find ways to cater to this customer. While signs of economic braking in China early this year jangled some nerves, the growth of the Chinese middle class continues and indeed is spreading to more rural areas. In fact, travelers from smaller cities made more purchases through Alipay than those from major metropolises like Beijing, Shanghai and Guangzhou, Ant Financial said earlier this week.
What has served to dull Chinese tourists' spending power is the strength of the dollar, which in recent months hurt sales at stores in the U.S. and Europe. Sales within China have remained steady, however, according to Tiffany executives. That makes offering Alipay quite valuable to retailers.
"There is an advantage to Chinese tourists of using Alipay abroad as, when they pay, the price in their local currency and the exchange rate will show up on their phone, typically making the purchase cheaper than on a credit card as the fees are lower," James Hebbert, UK managing director of Chinese digital advertising agency Hylink, told Retail Dive in an email. "The digitalisation of payments is empowering the consumer with their purchasing decisions. There is also a safety benefit as tourists do not have to carry cash. These financial benefits can be achieved by merchants in western markets too, as the rates are typically lower using platforms such as Alipay versus traditional credit cards."
Though that could be quite vexing to homegrown payment apps, U.S. or U.K. consumers are unlikely to gravitate to the Chinese apps because those Western markets are saturated with existing payment platforms like Apple Pay, Hebbert said.
"As Chinese payment giants such as Alipay and WeChat Pay embrace the West, they will have different objectives to Western payment platforms," he said. "However, their main strategy is to cater for in-bound Chinese tourists and students. These demographics are growing and have significant purchasing power. If it is easier to pay for items in the US or the UK, Chinese consumers are more likely to spend."