Getting a cup of coffee in Starbucks used to be a pretty pedestrian affair. Stand in line, hand over some crumpled banknotes and receive your fuel for the day. Mobile payments are changing that: more than just another way to pay, they are becoming the contact point for consumers and businesses. With the fast rise of WeChat Pay and Alipay, China is on the front line in designing new marketing channels—as well as collecting our data through mobile payments.
Starbucks is the most classic example of this trend, according to Thomas Graziani, co-founder of WalkTheChat, an agency focusing on China’s most popular social network WeChat. Starbucks launched its coffee gifting feature on WeChat last year in the form of coupons: users can simply buy a coffee coupon with a cute virtual card and gift it to a friend.
The promotion takes inspiration from “hongbao”—virtual envelopes for gifting money which boosted Alipay and WeChat Pay use during their nascent years. Today, they are commonly used by ride-hailing and food delivery apps in China to draw consumers, usually containing coupons or discounts. Since the rise of “hongbao,” other avenues for driving engagement are rising.
“The most basic type of interaction is to invite customers to follow the brand’s official WeChat account to get notifications for their order,” Graziani told TechNode.
Another is to automatically enroll customers in a group purchase, he added. Users share their purchase with friends on social media and get a discount in return. For brands, this can be a way to create some additional viral engagement.
In some cases, marketing with the help of mobile payments is beginning to eat away classical online marketing strategies. Chinese businesses have tried many ways to attract users but we can’t neglect that the costs of online promotions have begun to climb, said Ma Zheng, CEO of CJI (创匠信息科技), a company specialized in building mobile payment solutions. The numbers from Adobe’s last year’s study on digital advertising confirm his view.
“One year ago, some businesses gave up attracting users online, and they went back to offline to seek opportunities,” Ma told TechNode. “Mobile payments seem to be a great intermediary. The growth from online is limited but there is still growth potential from offline, so businesses started integrating their marketing solutions with mobile payments for new ways of attracting users.”
Where does the data go?
China’s obsession with QR codes shows the potential of mobile payment-based marketing. Shops, restaurants, entertainment venues—businesses across China are trying to draw customers into their web through mobile payments. Alipay and WeChat Pay have opened their ecosystem to welcome independent software vendors (ISVs) that can customize mobile payment solutions and provide marketing operations support, according to Ma.
The trend is especially popular among restaurants, which are CJI’s main customers. Some restaurants are giving up entirely on the concept of the classical paper menu. To place an order, guests scan a QR code that leads them to an online menu where they pick their favorite dishes and pay with the mobile payment app of their choice.
But the mobile payment trend is not only about convenience and boosting engagement. Advertising on post-payment pages is targeted to the customer’s profile, including gender, region, consumption habits, and other factors.
“I don’t think the data collected from mobile payment systems have any privacy concerns,” said Ma adding that CJI does not collect user data itself since his company only sells mobile payment systems which they develop for ISVs. Those systems are based on WeChat Pay’s and Alipay’s application interfaces (API) which means any data collected by an ISV is under the supervision of the two mobile payment solutions, he added.
“If Alipay and WeChat Pay that collect the data from customers have privacy concerns, then ISVs do too; if they are do not, neither do the ISVs.”
The global push
The mobile marketing trend is not limited to China. After all, Starbucks launched its Mobile Order & Pay Program in the US in 2015, long before it did anything similar in China. But despite the rise of Android Pay, Apple Pay, and Samsung Pay, China is still the leader in proximity mobile payment adoption with more than 60% of the worldwide user base in 2018. This means that businesses in the west are just beginning to notice what mobile payments can bring.
However, this might change quickly with the help of China or, to be more precise, Chinese tourists. China was the biggest spender in outbound tourism in 2017 forking out an astonishing $258 billion abroad. WeChat is already allowing overseas merchants to offer promotions and aftersales service through the platform in 25 countries as of March 2018. The question now is how to build a strategy to lure them.
“You can enable users to follow your WeChat account and stay in touch but the question is then what is your expectation,” said Graziani. “A design brand in Paris, for example, would have to have a cross-border strategy to leverage that. It could invite them to purchase [goods] online and have them shipped cross-border when they are back in China.”
According to a white paper released by Nielsen and Alipay, 65% of Chinese tourists have already used mobile payment while traveling overseas. 91% said they were more likely to buy from a merchant if they supported Chinese mobile payment services. The trend of marketing with payments is likely to catch up among foreign merchants in the near future and this might open to door to replicating China’s obsession with QR codes.