The race to offer user-friendly financial services sped up recently after Stripe established a link with the Chinese consumer market.
Top digital payment services Alipay and WeChat Pay agreed to a lucrative deal with Stripe. These services have established a time-honored hold over the Chinese market and its consumer spending. With Alipay’s 500 million users and WeChat Pay’s 600 million users, Stripe has gained access to over a billion consumers in one fell swoop.
Who are the companies behind these services?
Alibaba (Ant Financial) manages Alipay while WeChat Pay is linked to the all-encompassing Chinese messenger and social media app “WeChat” demonstrating the strong foundation both top-tier payment services possess.
Continuing with the statistics, China’s mobile wallet market is dependent on Alipay and WeChat Pay. These digital payment services account for over 90% of the mobile wallet market or approximately $3 trillion (2016) in combined earnings based on a recent U.N report.
Between the two digital payment services, Alipay’s share was listed at $1.7 trillion while WeChat App earned $1.2 trillion in 2016. With a combined $3 trillion coming from China and Stripe’s “billions” in America, the U.S. firm has acquired a substantial share of the worldwide consumer market.
Why has Stripe done this?
Entering China isn’t Stripe’s primary focus. Instead, its strategy remains reliant on providing online retailers with an opportunity to accept payments from Alipay and WeChat Pay users. By doing this, Stripe has opened 90% of the Chinese market for its pool of merchants. These merchants will see an immediate rise in earning potential as Stripe benefits from their profits.
Stripe pursued these deals since the payment structure in China varies compared to the United States meaning credit card users are limited. Therefore, a substantial amount of the Chinese consumer market uses and favors mobile wallet services to any other form of payment.
The deals mean Stripe has managed to unlock a consumer base that would otherwise be listed as unreachable.
Negotiating with Chinese digital payment services isn’t new territory for Stripe. In fact, the U.S. firm recently concluded its original deal with Alipay designed to cover the U.S. market. With its new arrangement, Stripe will now gain worldwide access.
It’s important to note, Alipay integrates beautifully with online retail platforms and is well regarded for its subscription services (i.e. recurring payments or consumer payment plans). This should make it a breeze for Stripe and its merchants. WeChat Pay is still in the “beta” stage according to experts while the integration-based details are worked on. Due to this reason, Stripe merchants will not gain access to the service until further notice.
Stripe has also acknowledged the launch of its service at a conference in Hong Kong. The official statement says the payment services will cover 25 nations and become accessible to Hong Kong merchants in a year (beta version).
The company stated demand remains sky-high and it has managed to bridge the gap with these deals. In fact, the rise in sales should result in a sizable boost in Stripe’s revenue and its position as a global brand.