On Monday, Tencent Holdings the internet giant based in China launched its payments service WeChatPay in Europe. The payments service will challenge its rival Alipay, which is owned by Ant Financial an affiliate of Alibaba Holdings.
WeChat is a huge Chinese social media service with 928 million active users monthly. Tencent has entered into a partnership with Wirecard a payments firm from Germany to allow retailers in Europe to accept the WeChat Pay as one of their payment options.
This move is aimed specifically at tourists from China that visit Europe and is not a challenger necessarily to payment services such as Samsung Pay or Apple Pay, both that operate in regions across Europe.
Consumers in China are used to using online mobile payment services such as WeChat Pay for things ranging from shopping to ride-hailing services. When Chinese travel abroad they want to have the same services available to them.
Tourists from China spent the most during 2016 of any other tourists dishing out more than $261 billion while abroad, said the World Tourism Organization from the United Nations. It is a very lucrative market and one Tencent hopes to capture.
However, it will be playing catchup with Alipay which since 2015 has been operating in Europe and has since then expanded into other locations such as South Africa.
Tencent said in China it had more than 600 million active users from WeChatPay. At the same time, Alipay recently released it is own numbers that put active users at over 450 million.
At this point, the problem is many travelers from China do not have the correct payment instruments and for them shopping is an important part of their journey abroad.
For each retailer targeting customers from China in the luxury segment of travel and entertainment, WeChatPay is a necessary payment option said an industry analyst in Hong Kong.
Wirecard helped Alipay to launch in 2015 across Europe. It acts as the acquirer or bundling all transactions for a retailer and processes them.
Tourists from China can open their wallet feature of WeChat, show the barcode on the smartphone they have to a retailer and the store employee can scan that code to activate the WeChatPay payment process.
Wirecard announced that the payment service will be going live beginning in November.