What Do Alipay & WeChat Pay Mean for Corporate Payments?

Merchants around the world now enable the millions of outbound Chinese tourists to pay for items as they can do at home. These merchants now accept the two most widely used Chinese mobile apps: Alipay and WeChat Pay. These apps "are processing 10 to 11 times more transactions than the U.S. as a whole," said Bradley Seitz, a partner in consulting firm Nina & Pinta.

Like Uber and Airbnb, which initially were banned by corporations but overwhelmingly embraced by business travelers, Alipay and WeChat are game-changing consumer tools. It may take time for corporates to adopt them, but the travel industry is working toward greater acceptance, even if primarily on the leisure side for now. Once the business travel community adopts Alipay and WeChat and such transactions begin replacing corporate card transactions, will banks and travel managers have to sacrifice data at the altar of usability?

More Than Mobile Wallets

Alipay and WeChat Pay are digital payment apps that function similarly to PayPal, but they're so much more. Users can link credit and debit cards, but because credit cards aren't popular in the region, users tend to transfer money from their Chinese bank accounts into the platforms, where the money is held in escrow. By charging a percentage fee for transferring the funds back into users' bank accounts, the apps encourage users to keep the money within the platforms. Users can shop online, make in-app purchases and make purchases at participating merchants and vending machines by scanning a quick response, or QR, code with their phones.

Additionally, people can use Alipay, which launched in 2004, to "hail a cab, book a hotel, buy movie tickets, pay utility bills, make appointments with doctors or purchase wealth management products," according to the Chinese mobile app. In March, Alipay claimed more than 600 million active Chinese users, as well as partnerships with over 200 Chinese financial institutions. It then announced a partnership with payment systems company First Data to enable Alipay acceptance at an additional 35,000 North American merchants.

WeChat Pay is the mobile payment capability of WeChat, an online social and messaging network that launched in 2011 and offers functions similar to Alipay's, including ride-hailing, food ordering and hotel booking. WeChat acts as WhatsApp-Facebook-Twitter-Instagram-Venmo-Skype-Slack rolled into one, making it particularly popular with those 35 years of age and younger and with advertisers. WeChat has more than 1 billion monthly active users and this year overtook Alipay as the most widely used app in China, and WeChat Pay launched in 2013 and reached 800 million users as of March, according to TechNode.

"China has skipped plastic and has immediately switched to mobile payment," an AirPlus spokesperson said. Moreover, "WeChat and Alipay play a completely different role in everyday Chinese life. Both platforms are not only payment methods but platforms that cover the most diverse areas of life."

Slowly but Surely?

Progress to accept Alipay and WeChat Pay outside China is slow, especially in the U.S., where mobile payments are less advanced than in Asia/Pacific and Europe. "WeChat is obviously very strong in China, and they're doing an awful lot to expand the footprint beyond mainland China," said BMO head of North American cards Steve Pedersen. "This has been the catch-22: If you build it, will they come? That's the hope."

Pedersen believes Alipay will be easier than WeChat to implement in North America because it follows traditional payment rails more closely. The cost of point-of-sale systems, though, "is not inconsequential," he said. "Think about the U.S.'s challenges in getting terminals for chip and contactless [cards]. It's yet another challenge."

In 2013, UATP enabled airlines and other travel partners like hotels and car rental companies to accept Alipay for direct bookings made online. To date, however, UATP has only two airlines that have gone live with Alipay. And in July, Airlines Reporting Corp. began processing Alipay transactions.

Also in July, Merlin Entertainments—which owns attractions like the London Eye, Madame Tussauds and Legoland—allowed Chinese tourists to use Alipay in London. Harrods, Selfridges Heathrow Airport and others had already enabled Alipay.

In January, Bank of America enabled WeChat Pay for corporate cards. It limits use, however, to those with mobile phone numbers and bank accounts from China, Hong Kong, Macau or Taiwan, explained Amit Sharma, Bank of America head of cross currency product and commercial cards in Asia/Pacific. While the bank sees WeChat use among corporates, Sharma said, it is "not yet that significant."

What About the Data?

Both Sharma and Pedersen said business travelers to and within Asia/Pacific can use corporate cards with established local and international merchants without much trouble. For other merchants, however, cash seems to be the easy way for travelers to handle daily expenses, Sharma said. While companies want to move away from cash transactions, they make exceptions for employees traveling to China, he said. WeChat and Alipay could solve for that problem, minimizing travelers' need for cash. However, the transactions can be as opaque to travel managers as cash expenses are, as the charges appear on card statements simply as "WeChat transaction."

"As yet, we have not seen the Level 3 data flow through," Sharma said. "Organizations will need to assess their appetite to approve such transactions, as they will lose the visibility on whether or not the transaction is within policy [and] at an approved merchant, especially when the transaction is not associated with a receipt." For travel managers who have increased corporate card usage and weeded out cash transactions, this could feel like a reversion to a bad habit. China Market Research Group senior analyst Ben Cavender said both Alipay and WeChat issue digital invoices that travelers can share with their employers for reimbursement.

Rising Possibilities?

Considering the high number of transactions occurring on these platforms, BMO's Pedersen doesn't doubt Alipay and WeChat will be an "absolute success" outside China. But he anticipates adoption will be faster in some jurisdictions than others, and he stopped short of offering a time line. "For international cardholders traveling to China, WeChat/Alipay are the only options," Sharma said. "For merchants outside of China, we see more options to offer WeChat/Alipay to cater for Chinese cardholders, in addition to other options."

For the apps to work for corporate travel programs, however, banks and corporate customers will have to be able to tap the data. If Alipay and WeChat don't want to feed the data directly to the banks, card networks or travel management companies, perhaps they can launch business versions of their platforms to feed receipts into expense systems, as Airbnb, Lyft and Uber have.

"If they start passing information, does it actually start opening up the door for adoption? Maybe," Pedersen said. "[But] if today you have a card program with us or one of the other banks and it's working, is this necessarily the pivot you want to make—to add to the payment suite—or go with what [already] works?"

Companies may embrace the apps regardless, even if reluctantly, because the decision ultimately may not be up to them. Just ask Uber and Airbnb.