When payment pains in China showed us our future

After several fieldwork trips to China this year, Claros have become at ease with its scale and charms. The sense of culture shock on arrival, the food, technology, and heat have become familiar like an old friend. But one thing never stopped surprising us. Payments, each time, were a pain: for us at least.

Even though we thought we had come prepared to tackle the challenge of payments in a cashless society (by buying local SIM cards, pre-installing VPNs, setting-up new WeChat profiles and having extra cash in hand), we all felt somewhat defeated when it came to paying for anything. This difficulty presented itself everywhere you’d expect and everywhere you didn’t; from paying for a bowl of fried rice at a street stall, to me exploring the Asian beauty fad of nail art cafes, and even with our clients picking up their morning coffee at the “local” Starbucks. No matter what the establishment, it seemed very clear that mobile payments such as Alipay and WeChat, were always preferred over cash, and almost no one accepted foreign credit cards.

Back home in Barcelona, we reflected on our struggles as outsiders to their forward-thinking systems. They have pioneered a cashless digital society, and we’re stuck on the other side of the Great Wall of China, exchanging grubby paper notes.

As difficult as it was for us to pay in China, we all admired just how much simpler it was (for everyone else) to live in a cashless society. Our frustrations stemmed from our inexperience navigating this new world, so we wondered how frustrating is it for Chinese travelers when they travel internationally? What’s it like for them to go to places that still rely on credit cards and physical banknotes? We interviewed some Chinese tourists to understand their experiences with their payments while abroad.

Sam, a 35 year Shanghai native, told us he’d visited the US and Europe on vacation four years ago. He remembers having to plan for large payments ahead by pre-booking hotels. During his vacation, he soon realized no one would accept the large notes (500/100 EUR or 100USD) that he received from the bank when he exchanged currencies. Even though there is an understanding of the overall payment system, it seems both Sam and we had to find out the hard way the details of what was acceptable abroad and how to hack this system as outsiders.

Conveniences and hardships aside, we wanted to dive deeper into how technology may be changing our relationship with money. Is it purely a methodical means of transaction or does our wallet play a new role in our lives? Yoyo, a cashless society resident, spoke with us about her own surprising revelations with Alipay. “It’s not just a payment tool, it is like an online bank, an assistant.” For Yoyo, it’s now about the services and access her e-wallet can provide her. Digital payments are solving commonplace problems she had once tolerated, like inaccurate transaction histories. Transparency, control and trust are new values she has gained through her mobile wallet and will no longer compromise on in the future.

What could this all mean for businesses? Consumers born into the dynamic realm between online and offline are increasing frustrated with having to switch between the two. Amelie, a millennial Chinese-New Zealander, voiced her annoyance in the lack of Alipay options abroad and having to revert to cash. This isn’t news to retailers and the battle of mobile payment operators is increasingly cut-throat. Businesses should avoid the war and instead look to make alliances. Effortless transactions are not novel and will become basic table stakes for retail.

The ball is in China’s (mobile) court. Companies in the rest of the world have begun to accept Alipay and UnionPay at more in-store and online locations to cater to Chinese tourists. Global enthusiasm across industries affirms that China’s payment ecosystem will not develop in isolation like the Japanese “Galapagos” phones did. Together with the announcement of WeChat opening offices in Europe, the talk of cross-border e-commerce has already begun and it’s up to the rest of the world to respond to China’s implementation of mobile payments.

As our behaviours with payments shift in an ever more globalising world, we need to stop thinking of our wallet as the old bell boy jumbling our items onto a cart but instead appreciate his promotion to a sharp concierge manager than won’t take no for an answer. Businesses should evolve payments through accompanying services and platforms, and assist users in thoughtful and personal ways.

The success of China’s digital payment system does not stem from a copy-and-paste mentality, notoriously associated with China. Instead, a global vision was ambitiously designed and locally implemented, and its nature is rapidly adapting. Businesses should prevent the urge to simply replicate but instead learn from the experiences of early adopters in the East and consider the psychological, cultural and technological elements that construct the architecture of a cashless ecosystem. With any luck, the leap forward won’t be so great next time Claros are on fieldwork in China.

Special thanks to the following friends of Claro who generously shared their insights and experiences.
Yoyo Chen and Denise Kwok from Asia Insight.
Charlie Cooper from The Shanghai Show.

Oct 4, 2017