WeChat holds the top spot in the Chinese mobile ecosystem. WeChat APP for Business via WeChat Pay can now build Sales in Australia.
Many see WeChat as a hybrid of popular social media platforms and messaging services, that has captured the Chinese imagination like no other. Users do almost everything through WeChat app, which offers features such as messaging, online shopping, gift giving, location tracking and group chat, among others. Businesses advertise themselves and deliver online services via handles that WeChat calls Official Accounts, and users rarely leave the app environment.
With nearly 800 million active users, it is one of the largest online communities in the world. The numbers offer a clue, but if one digs deeper, he/she will be amazed at the potential the app offers on multiple fronts, primarily because of its high engagement rate and aggregation of multiple features in one place.
WeChat Pay, the digital wallet offered by the app, has 300 million users and millions of transactions occur every day. The digital wallet connects with the user’s bank accounts and credit cards, allowing users to make transactions within the app without ever visiting the online user interface of banks or service providers.
Paylinx, an Australian cross-border payment specialist, recently launched WeChat Pay in Australia. With more than 1 million Chinese tourists visiting Australia each year, this now provides an increased opportunity for Australian merchants to capitalise on the spending prowess of the Chinese tourists. Given the Chinese fondness of foreign brands and products, and an ever-increasing number of tourists coming to Australia from China, the business potentials are huge. Tourism Australia predicts the Chinese tourists will contribute more than 13 billion US/year to the Australian economy by 2020, a significant increase from the current figure (8 billion). Chinese tourists are already spending more than 220 billion USD/year globally and that figure is ever increasing.
Australian businesses will have an easier time marketing their services to Chinese tourists with the display of the familiar WeChat app logo at their front. This not only makes easier for the Chinese to shop and pay, but will also provide them with the feeling of familiarity and comfort, necessary before one makes decisions related to expenditure.
The introduction of WeChat Pay in Australia is a very good news for Australian merchants. With the adoption of the service familiar with the Chinese, it is evident that the per capita expenditure of the Chinese tourists can now be significantly increased while also bringing on board once-reluctant shoppers.
The benefits of this to Australian businesses can be broken down into following:
1. Immediate trust building with the Chinese tourists: Tourists coming to Australia from China will be happy to know that a service familiar and native to them is available at the stores they visit. This will help generate trust with the merchants. Trust generation is key for any business, and this becomes more acute with purchases made in foreign countries.
2. Increase in per capita transaction: Customers will buy and spend more if they encounter a trusted WeChat logo at the stores. Removal of traditional hindrances, the addition of trust and usage of familiar service will ensure each shopper spends more. With WeChat Pay being offered by Australian merchants, an average Chinese tourist will now return home with a larger luggage and a smaller WeChat Pay balance.
3. Removing the language barrier: Since WeChat truncates the shopping actions into a few steps, less communication is necessitated between the customer and the merchant. This means a tourist without much grasp of the English language can still make transactions with the merchants, while using only a few sentences for communication.
4. Removing the bank and credit card barriers: WeChat has streamlined transaction by removing the banks or the credit card operators from the user interface. The fact that WeChat has placed official accounts (embedded apps of banks, businesses, etc) as secondary apps inside its system that rarely need to be opened on itself, is a huge step towards realising an app which operates as an operation system (OS) in itself. This aids time-limited tourists a lot, and merchants can capitalise on this by having the tourists spend more in a short time.
5. Transaction with those without recognized credit card facility: Very few Chinese use major credit card processors like Visa, Mastercard etc, and even when they do, it is already integrated with services like WeChat Pay. The fact that fewer than one in 100 Chinese tourists are unregistered in either WeChat Pay or AliPay (with the latter far behind we-chat in usage) makes it compulsory for merchants to offer the option to pay with WeChat Wallet. This allows to bring on board the tourists who have not been connected to global payment networks because of state regulations or hesitation.
6. The local market is huge, too: Recent data has suggested that there are nearly 4 million users of WeChat app in Australia. A large part of it is composed of students from China, expats, people with business network in China, and members of the Chinese community. This figure is significant and itself is capable of returning business worth billions, not to mention the effect of positive word and mouth they deliver to people back in China about the ease of shopping in Australia. Merchants without WeChat Pay will be losing this significant market, while those with the service will be reaping benefits.
7. Instant service: Suppose someone is looking for extra services from a hotel right before checking out, or someone is looking to book a tour with you in a short available time. With WeChat Pay, tourists will make instant buys and without having to go through lengthy procedures. It is important from the merchant’s point of view to make their services faster and more recognisable to the tourists if they are planning on capitalising their spending prowess fully. It also helps merchants in receiving payments instantaneously.
8. Low processing cost for businesses: There are two options in settling the transaction for merchants:
Tier 1 settlements, settled within a day of transaction, is charged at 1.8% per settlement
Tier 2 settlement, settled within 3 days, are charged at 1.6%.
The charge is relatively modest in market comparison. Moreover, merchants can also decide to include this charge in the bill of the customers. It is at the merchant’s will to decide if they charge some, all or nought of the processing fee to the customers.
9. Real time currency conversion: It is easy to come up with statistical reports or data about something that has occurred. However, the range of statistics seldom cover that what has not happened. One such subject is business lost because of hurdle in currency conversion. It is hard to come up with the exact figure on the volume of business lost because of the tourists not holding local currency, but it is safe to assume that the figure is huge. Currency conversion is a tedious and a bothersome process. It is an issue with online commerce, too, as people holding digital wallets mostly have deposits on one currency.
WeChat allows real time currency conversion. Customers can pay in RMB and the merchants instantly receive payments on AUD with real time conversion happening in between. This removes the trouble for the tourists to carry local currency on visit and helps merchants in offering hassle free instantaneous shopping to anyone with WeChat Digital Wallet.
10. Instant payment notification: Both the shopper and merchant receive instant notifications of the transaction. This allows for better financial management and trust building.
11. Faster transaction mean more customers: Rather than entering numerous credit card and other details for verification, a QR code scan is enough for WeChat Pay. Moreover, there are two options for QR code scanning:
Active, with customers scanning the QR codes of the merchant
Passive, with merchants scanning the QR code of the customer
This translates into flexibility and also gives the customers a choice, which is always a good thing for business.
12. Connectivity: Connectivity is a very important issue for any business, more so if you are looking to connect with a pool of 1.3 billion customers that live on the other side of the so-called Great Firewall. Australian merchants need to find ways to connecting with that huge customer base with ever-increasing purchasing prowess if they are to channel that revenue to their balance sheets. Since the stringent online regulations on the part of the Chinese authority mean that there are issues with instant business or eCommerce connectivity, WeChat can be a medium for creating immediate business opportunities and connecting with customer base in China for long-term motives. The purpose of connectivity in business is inherent advertising and no business can succeed without advertising to the target customers.
13. Branding: Let us resort to a few cliches. The Chinese are brand crazy and have a visible affinity (which might be an understatement) with foreign luxury items. This creates a huge scope for branding in China, more so online branding because the population base is shifting exponentially towards the digital age (read as: increasing use of smartphones).
WeChat and its official accounts are very important tool for branding. A single merchant may benefit in small volume from WeChat Pay transactions with Chinese tourists but brands can reap larger benefits by promoting themselves to millions.
The first step for individual merchants is to embrace WeChat for now, create a presence in the WeChat universe, attract users and followers, and use that digital presence for branding. It is a win-win for merchants if used effectively.
14. Net effect on the Australian economy: Businesses who earn extra by providing WeChat Pay service to Chinese tourists will be doing the national economy a huge favour. The volume of money that WeChat Wallet is capable of bringing to Australia, given the number of tourists coming to Australia each year and the projections for the future, cannot be neglected. If properly capitalised, this will inject a huge amount of money in the Australian economy.
15. Trickling effect: As mentioned earlier, the digital revolution has not diminished the power of word of mouth, but has in fact made it more stronger a phenomenon, with added capabilities as mass sharing and broadcast now being available to individual users. If the tourists who have visited Australia take back positive reviews about shopping in the country, then it opens door for more willing people to come to Australia and shop here.
16. Communication: As the proverb goes, ‘In China, do as the Chinese do’. One must use what the Chinese use if they seek to maintain communication with the large number of people there. Communication and connectivity can be used for a number of useful things, including news delivery, promoting culture and values, getting information, and most importantly, doing business. Hence, using WeChat pay is paramount for businesses for a multiple number of reasons, ranging from immediate to long term.
It is great working with such a dedicated and competent team in this ever changing space and I would highly recommend Michael and his work.