Following the news that American Express and Alipay have partnered to integrate global AmEx cards to the Alipay digital wallet in China, Jonathan Vaughan Burleigh, Associate Analyst, Banking and Payments at GlobalData, offered his view.
While it has been possible to link foreign credit cards and debit cards with Alipay’s digital wallet since 2023, American Express is the first foreign company that has been allowed to clear transactions in the local currency (Chinese Yuan).
This collaboration between two of the world’s largest payment providers marked a significant step forward, providing enormous convenience for international tourists and businesspeople traveling to mainland China.
With this integration, users can make seamless payments in stores, on public transport, and across the country’s significant super-apps.
Conducting transactions in the local currency has significantly reduced uncertainties associated with functionality, fees, and exchange rates, which are often associated with mobile payments.
Although larger stores, hotels, and attractions in major Chinese cities generally support foreign payments, smaller retailers, such as restaurants, bars, and even larger businesses in second-tier cities, are less likely to accept them, even through Alipay’s digital wallet. This local currency capability has bridged an essential gap in the payment infrastructure.
Varying fees and service charges across different networks have traditionally introduced uncertainty and friction in foreign transactions. The ability to pay directly in Chinese Yuan streamlines the payment process and alleviates concerns over additional expenses or unfavorable exchange rate differences.
According to GlobalData’s In-Store Consumer Payments Analytics 2024, Alipay has become China's number one in-store payment tool. Forty-one percent of Chinese consumers cite it as their most-used payment method, and 69 percent have used it at least once. Alipay’s extensive coverage across retail, entertainment, tourism, and dining has driven this widespread adoption.
GlobalData’s Mobile Wallet Analytics 2024 indicated that simplicity, speed, and the elimination of the need to carry physical wallets are the primary factors driving mobile payment usage. These benefits were especially significant for international travelers, who may face language barriers and the challenges of managing unfamiliar currencies.
Access to online marketplaces has allowed customers to avoid long queues and compare prices, ensuring fair deals. International American Express customers can now enjoy a secure, simple, and seamless payment experience.
American Express’ approach demonstrated a commitment to forging strategic partnerships that address market gaps. This partnership enabled local currency settlement, providing tangible benefits to consumers and further driving the growth of mobile wallets among travelers in China.
This development underscored the increasingly interconnected nature of international payment systems and marked a pivotal moment in the evolution of the global payments landscape.
