SHANGHAI -- Japanese retailers are rushing to adopt smartphone-based payment systems to court Chinese tourists, who have embraced this easy, reliable method of shopping.
At many stores in China, shoppers can pay by scanning unique QR (Quick Response) codes, a form of two-dimensional barcode, displayed on their smartphones and other mobile devices. Such a system costs little to set up compared with the dedicated smartcard and chip scanners common in Japan, lowering barriers to entry for smaller businesses and individual merchants. This type of simple, reliable payment is catching on quickly as a successor to debit cards, which are much more widely used in this country than credit cards.
China's mobile payment market totaled 9.3 trillion yuan ($1.4 trillion) in 2015, according to Chinese survey firm BigData Research. That is seen rising to 15 trillion yuan in 2017. Meanwhile, mobile payment company Square of the U.S. processed around $35.6 billion in payments in 2015 -- a fraction of China's total.
Alibaba Group Holding affiliate Alipay leads China's payment market with a 72% share. WeChat Pay, run by Tencent Holdings, comes in second. These companies are now expanding their Japanese footprint, helping deliver in Japan the payment infrastructure Chinese shoppers are accustomed to.
Tencent aims to have WeChat Pay in 10,000 Japanese stores by the end of 2016. This would let Chinese shoppers pay more easily while in the country, and would keep them connected to businesses after returning home. Stores could continue sending shoppers information on discounts and products, urging them to buy online.
Japanese companies are seeing an opportunity. Shoppers at major branches of the Takashimaya department store in Tokyo and elsewhere can settle up using services including Alipay and WeChat Pay. Although Chinese tourists are now spending less than before on a per-customer basis, Takashimaya expects the number of shoppers to keep growing, and hopes to draw in business with convenient payment options.
Convenience-store operator Lawson offers Alipay at nine locations, including one at Tokyo's Haneda Airport. Rival 7-Eleven Japan, a unit of Seven & i Holdings, is testing out the system at dozens of Tokyo-area stores. FamilyMart lets shoppers use Alipay at four stores.
New mobile payment options are under development as well. A major clothing chain has adopted a system from Japanese startup Origami allowing payments via smartphone without any specialized reader device. Recruit Holdings unit Recruit Lifestyle has developed an application compatible with both Alipay and a service from chat-app operator Line, drawing users including clothier United Arrows and shops at Okinawa's Naha Airport. Smaller merchants could also come on board in time, adding Japan to the growing list of countries where mobile payment is becoming the norm.