Why Travel and Fintech Go Hand-in-Hand

What do Harrods department store, the Sydney Fish Market, and the Wong Tai Sin Temple have in common?

They all accept Alipay, the fast-expanding mobile payments service owned by Jack Ma’s Ant Financial.

Along with WeChat Pay, Alipay leads the mobile payments market in China. 46% of Chinese internet users now pay for items using mobile payment services, and virtually all of them use Alipay or WeChat Pay.

However, our latest research shows mobile payment uptake in China has hit a ceiling.

While there’s room for growth in the country’s rural districts, it’s really an international focus which fulfils the ambitions of these payment services – but not in the way you might think.

Their aggressive global expansion plan is simple. Partnering up with local banks, merchants and third-party organizations will enable them to quickly scale their services across various markets.

But at least for now, this isn’t an attempt to target local consumers. Instead, it aims to provide easy payment services for Chinese tourists, and eliminate the hassle in post-travel chores like like sorting tax-refunds in their own currency.

Tapping into the Chinese Tourism Industry

Merchants all around the world would do well to accept both payment services if they want to tap into the spending habits of the substantial Chinese tourism industry.

1 in 5 Chinese WeChat Pay/Alipay users vacation abroad at least once every 6 months, giving Tencent and Ant Financial the opportunity to use this spending as leverage when negotiating with local banks and providers around the world.

There’s also a large market of high-spending Chinese tourists:

1 in 4 Chinese vacationers fall within the top income bracket.

Allowing them to pay through their native payments services could be the key to unlocking revenues from them, and, crucially, integrating these payment services is simple with no added technology needed.

Western Challenger Banks Target Outbound Travelers  

We’re seeing a similar process in the West, but it isn’t mobile payment services driving the trend.

Mobile-based challenger banks have set their sights on travel as a growth avenue, and millennials are their target market.

The likes of Monzo and Revolut have been offering consumers the best possible foreign exchange fees, which mirror the interbank exchange rate. This, together with waiving spending fees for foreign in-store payments, has proved to be important selling points.

Primarily, these banking alternatives have a large potential market among millennials.

In Europe and North America, millennial vacationers are a lot more likely to buy foreign exchange services compared to the average vacationer in each region.

These millennial vacationers are also ahead of the curve for purchasing or planning to purchase travel insurance, making this another area where challenger banks look to make their mark. Revolut now offers pay-per-day travel insurance, using mobile geolocation technology to optimize the service.

Although at a different scale to China, this is a strong indication of how handling and spending money abroad is disrupting financial industries.

Both the Chinese and the Western examples involve third-party incumbents targeting areas which have, until recently, lay with large established banks or insurance groups.

What makes this change so consumer-centric is that convenience, efficiency and transparency are powering it. And, with the help of these small-scale tech companies, these principles are becoming industry standards.