Easebuzz Payment Gateway: A New Chapter in Payments Going Overseas: Three Giants Go Global with One Wallet

Unlike in the past when cross-border tourism drove the expansion of overseas payment networks, the current cross-border QR code scanning marks a deeper level of Chinese payment technology and standards export. Behind the integration of payment systems is the construction of global QR code standards.

--Tang Jun Zhang Wei

Editor Zhang Wei Yuan Man

What do Malaysians need to prepare for travelling to China?

Previously, Ni Xiang would have advised at least two preparations: informing the bank to switch on the cross-border payment service for bank cards and exchanging RMB cash in advance. Now, in theory, all that is required is to carry a smartphone.

Ni Xiang is the CEO of TNG Digital, which operates the largest local eWallet, Touch'n Go eWallet ("TNG Wallet", known as the Malaysian version of Alipay).

Ni Xiang spent a week in China during the Hangzhou Asian Games and his smartphone basically met his payment needs. In addition, Ni Xiang said that in other countries, QR codes with the Alipay+ (cross-border digital payment and marketing solution) logo support TNG wallet scanning and payment.

TNG's cross-border payment attempts to connect the global digital payment tools and realise the strategy of "one wallet for all".

During the 2023 Hangzhou Asian Games, Ant Group upgraded the cross-border mobile payment solutions of "external card binding" and "internal use of external packaging", so that more international guests can "easily travel to China with one machine in hand! The solution enables more international guests to "travel to China easily with a mobile phone in their hands".

Ant Group is not the only Chinese company trying to connect to the global payments network.

On 13 October 2024, UnionPay International signed a Memorandum of Understanding (MoU) with the National Payment Corporation of Vietnam (NAPAS) in Hanoi, agreeing to deepen cross-border QR code interconnection cooperation and promote scanning and payment between UnionPay QR code wallets and local wallets in each other's networks.

On 13 September 2024, WeChat Pay announced a partnership with PayNet Malaysia to give more than 2 million Malaysian merchants access to WeChat Pay, which allows WeChat users to complete payments by directly scanning the local DuitNow QR code.

Behind the interconnection of cross-border payment networks is a driving force from a higher level.

Previously, the People's Bank of China ("PBOC") has been actively promoting the optimisation of the payment experience for foreigners coming to China, guiding payment institutions to meet the needs of foreigners coming to China for mobile payment through "internal use of external packaging" and "external card binding". The Central Bank of China ("CBOC") has been actively promoting the optimisation of the payment experience for foreigners coming to China by instructing payment institutions to meet the mobile payment needs of foreigners coming to China through "internal use of the outer packaging" and "foreign card binding".

Obviously, the current cross-border QR code scanning driven by Payments Abroad is an export of technology from Chinese payment companies, compared to the previous full coverage of payment networks driven by cross-border travel.

Southeast Asian countries are now building a more integrated payment environment through bilateral and multilateral cross-border QR code payment co-operation, according to a report published by the Boston Consulting Group (BCG).

Caijing has learnt that UnionPay is actively developing and promoting its QR code standards, seeking to co-operate with other payment giants to promote globally applicable QR code standards.

Under the new external environment and policy guidance, China's payment abroad is entering a new phase and facing several new business stories.

Jia, who has just returned from a trip to Thailand, believes that China's payment ecosystem is seamlessly migrating overseas. "Mobile payment services such as WeChat code ordering, online taxi hailing and online ticketing are extremely common, especially in big cities like Bangkok, where lifestyles have become very close to China."

The story of paying to go abroad begins in Southeast Asia.

It takes only 3 hours from Chengdu Tianfu Airport to Bangkok Suvarnabhumi Airport.

The moment the plane landed, Xiao Jia had a thought, "Going to Thailand is closer than going to Beijing."

Due to factors such as geographic proximity, Chinese residents have been very enthusiastic about travelling to Southeast Asia. Data released by Thailand's Ministry of Tourism and Sports shows that from 1 January to 6 October 2024, Thailand received more than 26.64 million international tourists, of which nearly 5.39 million were Chinese tourists, ranking first.

In early 2023, as the effects of the outbreak fade, the payment giants are once again synchronised to follow in the footsteps of Chinese tourists and converge on Southeast Asia.

On 3 February 2023, Etienne Ng, director of WeChat Pay Southeast Asia, reportedly said in an email, "We see Singapore as a strategic market for WeChat." With the relaunch of outbound travel for Chinese residents, the company aims to "make it easier for Chinese tourists to patronise local merchants."

Ten days later, on 13 February 2023, WeChat Pay announced a partnership with Grab, a large Southeast Asian ride-hailing company, allowing users to book ride-hailing services in Southeast Asia through the WeChat app.Grab is based in Singapore.

In July of the same year, the Tourism Authority of Thailand (TAT) and Alipay held a press conference in Hangzhou, entitled "Alipay Accompanies You to Experience the Real Thailand", to establish a strategic partnership and launch a joint marketing programme.

Since 2023, UnionPay International has accelerated the rollout of its "Network Interconnection" co-operation, achieving cross-border interconnection of its QR code network with a number of Southeast Asian countries, including Malaysia, Cambodia, Thailand and Indonesia.

A payment industry observer told Caijing that after the epidemic, the relevant payment organisations have once again stepped up their efforts in the Southeast Asian payment market, mainly because this market is not unfamiliar to them, and the epidemic has only affected part of the layout plan, but it has also brought new business opportunities.

"The reason why the Southeast Asian market is not unfamiliar is because the layout in Southeast Asia has been going on for a long time." Observers said.

As early as 2004, two years after its establishment, UnionPay began to explore internationalisation, expanding its acceptance network to follow the footsteps of Chinese people going abroad. By around 2015, UnionPay had basically realised that "UnionPay cards can be used wherever Chinese people go", and then moved on to "UnionPay card services can be provided wherever global tourists go".

Around 2013, Alipay and WeChat Pay began to focus on the outbound travel business and entered the Southeast Asian market to lay out their QR code acceptance network. Thanks to the local payment habits of Chinese people and the cost advantage on the merchant side, Alipay and WeChat Pay's QR codes spread rapidly in Southeast Asia.

As China has become the world's largest outbound tourism market, Chinese people are spending more and more on travelling abroad, which was particularly evident before the epidemic.

According to the World Tourism Organisation, China has been the world's largest consumer of outbound tourism for many consecutive years since 2012.

In 2018, Chinese tourists spent $277.3 billion abroad for the year, up about 1.7 times from $102 billion in 2012.

The 2019 China Balance of Payments Report released by the Administration of Foreign Exchange (AFE) shows that in the first half of 2019, China's out-of-country travel expenditure reached US$127.5 billion, with more than half of it occurring in the Asia-Pacific region.

At the same time, the amount of consumption by residents of countries along the "Belt and Road" is also growing, with Singapore, Thailand, Vietnam and Indonesia at the forefront.

In the early 2020s, the New Crown epidemic swept across the globe, dramatically reducing cross-border exchanges of people. "Almost overnight, Southeast Asia lost Chinese tourists." The owner of a seafood restaurant in Kuala Lumpur, Malaysia, recalls how the situation was such that his restaurant's daily turnover dropped from over 100,000 ringgit to 500 ringgit due to the decline in Chinese tourists.

For payment organisations going abroad in Southeast Asia, their outbound travel business and cross-border payments are under huge pressure.

"What is lost is gained." The penetration of local mobile payments in Southeast Asia accelerated during the epidemic, and digital services such as code ordering became popular.

According to data released by BCG, more than half (56%) of Southeast Asian consumers reduced the frequency of cash payments following the outbreak, with nearly two-thirds of those users located in Indonesia and Vietnam. "This marks a significant change in the region's two most populous countries."

On the other hand, this change is also reflected in the rapid spread of digital payment solutions. One-third (33%) of consumers used an e-wallet for the first time during the epidemic, and more than one-quarter (26%) used a QR code payment solution for the first time. QR code payments are now one of the most popular mobile payment methods in Southeast Asia.

Worldpay's Global Payments Report 2024 shows that QR code payments were widely used outside of North America and Europe in 2023, with the Southeast Asian market performing particularly well. Juniper Research predicts that QR code payments in the Southeast Asian market will grow by more than 5,90% by 2028.

For some Southeast Asian merchants, they are coming to realise that accepting mobile payments is not just about cutting costs, but also about making the large number of Chinese tourists feel more comfortable locally, said a payment provider expanding its business in the region.

Market research has shown some changes in users' travelling, tourism and mindset after the outbreak. Among them, security, friendliness and visa convenience have become the top three indicators for users' travelling. In the current tense global situation, friendliness is greatly expected by cross-border travellers, but the safety factor is still at the top of the list. "This includes not only the security of the local situation, but also the security of payments and funds." A payment organisation source said frankly.

Since 2023, several Southeast Asian countries have introduced visa facilitation measures for Chinese citizens. To date, Singapore, Malaysia, Thailand and Laos have announced phased or permanent visa-free policies for Chinese travellers.

From travelling with one mobile phone to taking one abroad, Chinese people who are used to mobile payments are increasingly finding that their lifestyles haven't changed much in some Southeast Asian countries.

Why are payers making Southeast Asia a key region for going abroad?

On the one hand, Southeast Asia is geographically close to China; on the other hand, China is geographically close to the ten ASEAN countries, said Wang Pengbo, a senior analyst who consults the financial industry.

"Thanks to the implementation of the RCEP trade agreement, Southeast Asia's economic and trade exchanges with China are rapidly heating up, and the local e-commerce and mobile payment industries are growing rapidly." Broadcom Consulting research notes that from early 2023 to 2024, cross-border payment organisations have increased their investments in Southeast Asia, including but not limited to mutual recognition of code sweeping between payment instruments in various Southeast Asian countries, as well as access to local lifestyle services with marketing solutions.

It is worth noting that the payment giants are not only going abroad in the Southeast Asian market. Alipay, for example, has partnered with South Africa's Vodafone Group to launch a mobile payment wallet, VodaPay, with Alipay providing the underlying technology, according to previous media reports.

In Malaysia, QR codes for Alipay, WeChat and UnionPay placed side by side are a common sight. The story of the three organisations' competition abroad is already unfolding.

According to the former seafood restaurant owner, the proportion of Chinese tourists using UnionPay cards accounted for 80% until the end of 2013, then Alipay and WeChat Pay came and quickly took some of the share.

At the time, both domestic and international payment organisations were competing for Chinese outbound tourists, a payment industry source said. Apart from UnionPay, WeChat and Alipay, international card organisations such as MasterCard also tried to get a piece of the action.

As competition in the market intensifies, all three giants plan to transform locally, starting with serving Chinese tourists travelling out of China.

Ant Group chose to start with investments. Since investing in Paytm, India's version of Alipay, in 2015, Ant International has invested in Malaysia's Touch 'n Go eWallet, Thailand's TrueMoney, the Philippines' Gcash, and Indonesia's Dana. what some call a bulk "copy of Some call it a bulk "copy" of Alipay.

In the early days of AntPay's trip abroad, it was mainly to set up a sample for the local area, otherwise it would be hard to know whether the path would be successful, the former observer said. "Investment is not its main goal, its main task is empowerment."

During the epidemic, the demand for contactless services such as code scanning for food ordering increased significantly in Southeast Asian countries, but the technical capabilities of local service providers were difficult to support. According to the aforementioned payment organisation, at that time, many Southeast Asian merchants could only scan a PDF file, which allowed them to see pictures, but they needed to call a waiter to order food.

In 2020, Jin Xianfeng, chairman of Ant Group, first put forward the concept of "Alipay+" at the Lujiazui Forum and announced that Ant had launched the Alipay+ solution. Jin Xianfeng said that "Alipay+" refers to helping global merchants and e-wallet users to achieve connection.

The official Alipay+ website shows that as of 26 October 2024, it has over 30 mobile payment partners, 300 acquiring partners and 9 million merchants in 66 markets worldwide.

WeChat Pay is also trying to export its digital capabilities overseas.

This year, WeChat Small Programs further increased its investment in inbound and overseas markets, including the establishment of a dedicated overseas Small Programs team focused on serving the needs of businesses in Hong Kong, Macau, Taiwan and overseas regions. Data shows that in the first three quarters of 2024, the number of applet transactions for merchants in Hong Kong and Macau nearly doubled year-on-year, and the value of transactions grew by about 70%.

"We hope to provide more 'plug and play' capabilities and tools at the product level to help merchants and service providers lower the threshold of development and operation, and we also hope to 'fill the gap' and link more ecological forces by that help merchants improve their digitalisation and serve more users." Hu Renjie, deputy general manager of WeChat Open Platform, said.

Taking Big C, a local supermarket in Thailand, as an example, through the WeChat app, the supermarket can provide Chinese tourists with services such as booking orders, in-store pickup, local delivery, self-service tax refund and postal return. In addition, Big C has laid out offline materials and corporate WeChat QR codes in more than 20 of its popular supermarkets, guiding users to join groups to learn about the subsequent tax refund process and access private domains for ongoing operations.

In recent years, in addition to restaurants, department stores, supermarkets, convenience stores and attraction ticket purchases, WeChat Pay has further expanded its overseas city service scenarios, such as transport and attraction ticket purchases.

The latest data shows that WeChat Pay has provided mobile payment tools for 74 overseas countries and regions, supporting settlement in 31 currencies, with more than 1,000 overseas partner organisations and over 6 million overseas merchants.

Notably, WeChat Pay has attempted to operate local wallets overseas.In August 2018, WeChat Pay MY (WeChat Pay Malaysia Wallet) was launched to provide Malaysian users with local payment services settled in ringgit.In January 2020, WeChat Pay received approval from Indonesia's central bank to operate locally.

However, on 1 September 2024, WeChat Pay MY officially ceased service. Responding to the media, WeChat Pay said that the closure of the local wallet, which was denominated in Malaysian ringgit, was part of Tencent's strategic realignment in Malaysia, and that the company would focus on providing "RMB cross-border payments" in the country.

Tencent's financial report shows that the total number of monthly active users of WeChat and WeChat reached 1.371 billion at the end of June 2024, up 3% year-on-year. however, Worldpay reports that WeChat Pay and Alipay have not become the dominant payment methods in markets other than mainland China and Hong Kong.

According to previous media reports, the WeChat team said, "In the next three years, we will not seek to provide more local payment wallet services for overseas consumers, but instead focus on serving Chinese outbound travellers in popular overseas destinations."

The WeChat Pay team recently told Caijing that WeChat Pay's international business continues to focus on two key scenarios: Chinese outbound travel and foreigners coming to China, while exploring diverse payment technology innovations.

Of the three payment companies, only UnionPay has its DNA deeply rooted in the bank card business.

At that time, UnionPay International's business focus shifted to co-operating with overseas organisations to issue UnionPay cards and serve local users. UnionPay International's overseas issuance areas follow two main lines: one is the neighbouring regions of Northeast Asia, Southeast Asia and South Asia; the other is the markets along the "Belt and Road".

As of the end of September 2024, UnionPay has issued UnionPay cards in 84 countries and regions, with nearly 250 million cards issued overseas. Among them, the Asia-Pacific region accounts for more than 80% of the cumulative issuance volume.

In recent years, the acceptance of mobile payments has gradually increased globally, but bank cards are still the mainstream payment method. The aforementioned Global Payments Report 2024 shows that bank cards (debit and credit cards) account for more than 60% of offline consumer payments in Europe, and even more than 70% in North America. even in Southeast Asia, the mainstream payment method in Singapore is bank cards.

Under such circumstances, UnionPay has proposed the overseas card issuance strategy of "one card" + "one code": i.e., while issuing UnionPay cards, UnionPay standard QR codes are configured in the apps of issuing banks, or non-UnionPay non-standard QR codes are configured in cross-border QR code payment interconnection services to cover the needs of users for mobile payment. standard QR code in the cross-border QR code payment interconnection service, so as to cover users' mobile payment needs.

In addition, in order to improve the efficiency of card issuance, UnionPay International cooperates with overseas banks or e-wallets to support bank or wallet users to apply for UnionPay digital cards in their apps. Currently, UnionPay overseas partner wallet users can complete payments by scanning the UnionPay standard QR code or mobile flash payment.

According to data previously released by UnionPay, the proportion of digital cards among newly issued UnionPay cards issued overseas in 2022 exceeded 40%, becoming an important driving force for the localisation of international business. As of June 2024, the number of digital cards issued by UnionPay overseas reached 50 million.

As payment companies go abroad, the regulatory compliance risks posed by cross-border are becoming more pronounced.