Payment lessons from China
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All eyes are on the Chinese travel market at the moment, and with good reason.
With China set to overtake the US as the largest outbound travel market this year, and the world’s largest domestic market by 2017, it’s a market no travel player can afford to ignore.
On a recent trip to Shanghai, I was having dinner with a Chinese colleague. When we paid the bill, she got out her credit card to pay for our delicious, yet inexpensive meal. I was surprised; usually I would pay in cash for such a small amount. She explained to me that she rarely carried cash, as it was so easy to use her credit cards or eWallet for just about any purchase.
I was fascinated. I had not seen this level of acceptance for electronic payments anywhere else in the world.
In more developed markets, buyers tend to rely on traditional payment methods such as debit and credit cards. In China, consumers are far more open to new and innovative forms of payment methods such as eWallets. In a relatively short amount of time, eWallets have gained the trust and loyalty of Chinese consumers. In fact, 29% of Chinese consumers today prefer using eWallets when compared with other preferred payment methods such as online bank transfers (26%) and credit/debit cards (33%).
Travel is a big expense for consumers. For the wealthy in China, travel is the most preferred leisure activity, and accounts for 25% of total expenditure with the average high net worth individuals. Airlines and travel agencies who can offer these hugely popular payment options upon checkout are gaining a step ahead. And that’s where Amadeus comes in.
To give our customers more options and to take advantage of the growing Chinese travel market, Amadeus has recently signed agreements with two key payment players in China: Alipay and UnionPay. Combined, these payment methods will cover close to 65% of China’s total online payment market.
Alipay is China’s leading online payment service provider, accounting for nearly 50% of all online payments. UnionPay is the leading local payment card in China and the largest in the world by cards in circulation (4.3 billion globally), a remarkable achievement considering the company was founded just 12 years ago.
By integrating these two providers into the Amadeus Payment Platform, our customers around the world can offer millions of Chinese travellers their preferred payment options. Our customers are not limited to Chinese outbound travel, but they will also be able to access Chinese consumers who live outside China.
As we have seen in China, the travel payments environment is changing and evolving at an unprecedented pace. This evolution can bring new complex processes. Amadeus is delivering a new platform, the Amadeus Payment Platform (APP), to address all payment needs for travel merchants and travellers alike – a simplified payment process with an aim to improve the whole travel experience.
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1 – E-wallet: Is a method of payment to complete electronic transactions which can be funded via different ways (receiving money from another e-wallet account, bank transfer, credit card, etc). This method eliminates the need to enter the account information when making the payment. E-Wallets are the most popular alternative methods of payment in the online environment (non credit cards).2 – Cybersource report on China e-commerce market
3 – Amadeus report – Shaping the future of travel in China: the big FOUR effects
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