When Novatti, an Australian fintech company, announced a deal with RoyalPay, the Australian payments service provider, regarding Chinese social media and payments platform WeChat, interest was high. Novatti will facilitate the payments between two parties using WeChat Pay.
This announcement heralded the entry of WeChat Wallets into Australia, and investors rejoiced, driving Novatti shares up 67 percent.
In the same week of the announcement, Tencent (parent company of WeChat) overtook China Mobile to become Asia’s most valuable company, with a market capitalisation of $255 billion USD. To put that into perspective, that’s more than double Australia’s largest company: CBA.
The WeChat messaging app has over 800 million monthly active users, with 400 million of them using WeChat Pay. WeChat Pay has fundamentally changed the way Chinese consumers make payments. It has two transaction methods – you can either directly transfer money to another party or you can pay for things at a store.
First, you transfer money directly from your WeChat Wallet to anyone in your WeChat contact list. You can top up your WeChat Wallet by using a credit card or bank account. In stores, the app generates a one-time QR code and the cashier simply scans it.
Since WeChat Wallets must be connected to a Chinese credit card or bank account, the inaugural users will be Chinese tourists and students. Over 1 million tourists from mainland China were expected to visit Australia in 2016, and Chinese students make up roughly 30 percent of all international students enrolled in Australia.
The potential to tap into the broader Australian market is clear.
Alex Scandurra, chief executive officer, Stone & Chalk, which is hosting RoyalPay says: “Clearly the leading use case is likely to be tourists coming over, so the question for me, and for everyone, is going to be, is it really going to extend beyond that? How they go about doing that and how aggressive they’re going to be is really the question.”
Scandurra thinks they will learn from the tourist market, then possibly use Australia as a test for the Western market.
As Australian banks and industry players continue to compete for ascendancy in the digital wallet market, a new player from Asia has emerged. WeChat’s success in its foray into payments is ultimately driven by its seamless integration of a social media/communications platform with a payments service.
With the New Payments Platform arriving, the Australian payments landscape is shaping up to be a highly competitive field.
This article originally appeared in the KPMG NewsRoom.