As long as local residents can’t use Alipay or WeChat Pay and enjoy its convenience, it will be rather hard for Chinese mobile payment service providers to expand overseas. However, it takes time to develop user habit and make mobile payment part of local residents’ lives. In the short term, they will have to make up the limit with other aspects of services.

2. The difficulty in promoting e-wallet service

It’s also no easy task for Chinese mobile payment service providers to promote e-wallet service overseas. Although overseas markets may be under-developed, there are special cases. As a matter of fact, some countries do have mobile payment service providers like PayPal, Apple Pay and Google Wallet, etc. The only difference is that mobile payment is not as widespread as it is back in China.

Currently, Alipay’s overseas expansion is still centered around East Asia and South East Asia, while Ant Financial hasn’t been able to dive deep in the European and American markets. While European and American markets have a solid foundation for mobile payment, South East Asian countries are often poorly grounded. Therefore, it’s a lot easier to enter these markets.

Compared with Alipay, WeChat may face even more difficulty in its overs expansions. How come? In a sense, what WeChat does in China is what Facebook and Twitter do abroad. Faced with the huge challenge from overseas social networking platform, it’s no easy thing for WeChat to expand in overseas markets, let alone promoting its mobile payment service. Worse still, WeChat may not understand well the user habit of overseas users. This may help explain why users of the overseas version of WeChat APP are still mainly overseas Chinese.

Some potential obstacles in WeChat Pay and Alipay overseas expansion

1. Xenophobia

It’s common for people to get xenophobic against things they are unfamiliar with. For example, South Korea is known to be xenophobic against foreign enterprises and South Koreans often prefer to buy products and enjoy services from local brands. Such mentality is even more obvious when it comes to money.

In response, Alipay chose to avoid direct competition with South Korean counterparts and team up with Kakao Pay, a local third-party mobile service provider, to enter the South Korean market. It is only by means of a local brand that Alipay can reduce xenophobia against a foreign brand like Alipay.

In fact, such mentality is also widespread in other countries. After all, xenophobia can’t be eliminated. The only thing a foreign brand can do is reduce and avoid it. This rule also applies to WeChat in its overseas expansion.

2. Challenge from local mobile payment service providers

Although Chinese third-party mobile service providers are rapidly developing, it doesn’t mean there aren’t their counterparts in overseas markets. Although it may not be as widespread, it is nothing too novel. For example, the US has PayPal, the UK has World Pay, Canada has Alert Pay. These local mobile payment service providers don’t necessarily have a shorter history than Alipay and often have a solid user base. Therefore, it will be rather difficult to make a difference in these overseas markets.

Worse still, there may also be a couple of mobile payment service providers in many countries, which makes it even harder to expand in these markets. For example, India has local mobile payment service providers including Paytm, FreeCharge and Mobikwik. After India discontinued 500 and 1000 rupee currency notes, these service providers enjoyed a rapid growth. Among them, Paytm takes a big lead, as Alipay once did back in China.

The Indian mobile payment market is already quite competitive, let alone the European and American markets. Although Chinese mobile payment market is comparatively speaking more developed and Chinese mobile payment service providers have more experience, experience is not enough to enter and stand out in overseas markets.

3. Governments’ interference

Again, let’s take India for an example: As the competition among Indian mobile payment service providers continues, the Indian market announced that it would soon launch a Unified Payment Interface (UPI) and BHIM, a government-backed mobile payment tool, which, for sure, is going to have a huge impact on the Indian mobile payment market.

The decision came not only as a major blow to Indian third-party mobile payment service providers, but also their foreign counterparts. In response, both Alipay and WeChat Pay have to adopt some “flanking tactics”.