In this second article studying inbound travel payment, the analysis focuses on experience in mainland China and Hong Kong SAR (Special Administrative Region), China, as well as the key development opportunities.
Growing usage of digital wallets and linked cards in China
Different from other key East Asian markets, application is one of the key hurdles for visiting China. To improve this, China has worked with Singapore, Malaysia and Thailand on visa exemption for travel up to 30 days, in addition to a transit visa exemption policy for 50+ markets. Other nationals still need a Chinese visa. As visa application payment is the first impression, payment options at the application service centre can be diversified, to meet the preference from different segments.
To facilitate foreign card holders for QR payment (especially at stores only accepting digital wallets), card operators (Visa, Mastercard, American Express etc) have established partnerships with Ant Group, Tencent, and UnionPay since 2023, to enable foreign issued cards’ linkage to AliPay, WeChat Pay, and UnionPay app. This powers foreign cards’ usage at the majority of merchants accepting those digital wallets, across multiple verticals including transport, foodservice, retailing and lodging.
In parallel, Ant Group and UnionPay have been expanding embedded QR cross-border payment partnerships with foreign digital wallets (eg TNG in Malaysia) and banks (eg OCBC in Singapore) globally. This enables their users’ ability pay with foreign apps on networks of AliPay+ and UnionPay.
One thing to note is that one author experienced a roaming speed issue in crowded districts, failing a few payments in 2023, especially when he could not pay by card or cash for a taxi. Payment firms may work on solutions requiring little or no data, while advising international visitors to switch to local telcos’ SIM cards.
Other issues also include: 1) low merchant acceptance rate for physical foreign cards; 2) long identity check period and high failure rate when linking foreign cards to Chinese digital wallets; 3) additional fees for foreign cards.
In March 2024, Chinese government agencies disclosed policies advising AliPay and TenPay regarding user experience improvement on linking foreign cards, while encouraging increasing merchant acceptance of physical foreign cards at large shopping districts, airports and train stations.
81% of inbound travel payments in Hong Kong, China in 2023 were conducted via credit card
Source: Euromonitor International Travel system
Hong Kong SAR, China connects the Western markets and Mainland China. It has been adopting both contactless NFC/QR payment, on public transport, at attractions etc.
An author could use a Singapore virtual card linked with Google Pay (NFC) to conduct payments without physical cards. However, not all gantries of subway stations are equipped for contactless NFC payment. Travellers have to walk an extra distance to find those gantries to enter and exit. It might be helpful to add more guide signs in the stations.
Furthermore, there are hardly any signs of PromptPay acceptance to be found in Hong Kong currently. Thus, although merchants, especially independent foodservice outlets, are transitioning to be cashless, current payment options are limited to Octopus pre-paid card, AliPay or WeChat Pay, which are not friendly to non-Chinese tourists.
Addressing those issues, two key opportunities can improve customer service: payment experience optimisation and diversification of payment methods.
Payment experience optimisation is the critical component leading to overall satisfaction of the customer journey.
55% of industry respondents in Asia Pacific chose “improve the customer journey and user experience” for key commercial development in 2023
Source: Euromonitor International Voice of the Industry: Global Digital Survey, fielded November 2022 (n=132 in Asia Pacific (n=485 globally), online respondents only)
On the consumer side, 17% of Asia Pacific online consumer respondents complained that the “checkout process was too long or complicated” (Euromonitor International Voice of the Consumer: Global Digital Survey, fielded 2023 (n= 7,039 in Asia Pacific (n= 20,079 globally), online respondents only).
An author struggled for hours to make payments by four brands of Singapore credit cards to purchase an air ticket at a neighbouring market’s airline’s website. Travel companies may conduct customer struggle analysis to identify payment gaps, while carrying out performance benchmarking among the payment vendors to identify the best fit.
Payment diversification is critical to address the need from the domestic underserved segments, while also important to capture the cross-border payment from foreigners.
29% of industry respondents in Asia Pacific chose “diversifying payment options” for key commercial development in 2023
Source: Euromonitor International Voice of the Industry: Global Digital Survey, fielded November 2022 (n=132 in Asia Pacific (n=485 globally), online respondents only)
There was also 8% higher preference in emerging markets in Asia Pacific, due to less developed payment infrastructure, and lower penetration of credit cards in emerging markets. BNPL is an entry credit product to serve those underserved, namely for big-ticket items such as air tickets.
USD34 billion: Total market value sales size of BNPL of 12 researched markets in Asia Pacific in 2023
Source: Euromonitor International from Passport Consumer Finance
Also, in emerging markets including Mainland China, growing merchant acceptance of foreign physical cards is critical. Not all travellers are willing to install WeChat Pay or AliPay. In developed markets such as Singapore, Japan and South Korea, priority is given to enhancing cross-border QR transactions, especially for tourists from emerging markets.
To conclude, different markets and different segments have different needs, so companies may conduct market research to uncover insights for targeted segments in specific markets, to capture the opportunities in travel recovery.
For more insights in travel finance, please read reports in embedded finance, cross-border transactions, and FinTech’s next phase. For more insights in travel and loyalty, please read content in rewards redefined, elevating engagement, and top travel trends in 2024.