WeChat, with 1 billion users, is now doing payments at 50 U.S. retailers

This story has been edited. Please see below.

WeChat is expanding its reach as a payment platform to the U.S.

China’s biggest mobile platform, which counts 1 billion monthly active users, on Tuesday partnered with two U.S. companies to allow WeChat users — Chinese visitors — to make cashless purchases with gift cards at 50 local retailers, including Nike, Saks Fifth Avenue and Nordstrom.

The deal WeChat struck with financial services firm Travelex and its sister company Swych works through WeChat virtual wallets. Like Paypal, WeChat users can add funds to their wallets via a bank account or a credit card. The virtual wallets are ubiquitous in China and used to pay for everything from taxi rides to movie tickets.

For retailers, who must pay a percentage-based fee to participate, the arrangement makes it easier for Chinese tourists visiting U.S. retailers to shop in local stores. It fits with WeChat’s retail strategy in the U.S. with Alipay’s, which natively integrates with payment processors at retailers to allow cashless transactions without charging customers a fee. Alipay is available in large U.S. retailers such as Guess and Lacoste.

Dubbed Travelex Pay, the WeChat service will feature an additional hoop for shoppers to jump through: They have to download a gift card to display on a smartphone to check out at a retailer. No gift cards are needed for Alipay, which converts Chinese yuan to American dollars, and generates revenue by charging retailers fees.

While companies like AliPay and WeChat are making headway, these initiatives haven’t done away with costly currency exchanges fees entirely, or the need to swipe a Chinese credit card with its costly international transaction fee. Despite the push, hundreds of thousands of smaller U.S. businesses — bars, restaurants and mom-and-pop shops — won’t be covered under the arrangement. 

“We all know that despite the advancements in mobile payments and technologies, cash and plastic credit cards are not going away anytime soon. You still need them,” said Swych CEO Deepak Jain. “From the retailer perspective, the biggest advantage of Travelex Pay and the service inside WeChat is to simplify the most common behavior that a Chinese tourist does, which is shopping at the luxury and high end brands.”

Jain declined to specify fees the U.S. retail partners of Travelex Pay will have to cough up, but he allowed that they were “similar” to the fees credit cards charge merchants. Those tend to range from 1 to 2.5 percent, though some impose individual transaction fees of a dime or so. It’s unclear whether Travelex will impose such fees, which add up on purchases of only a dollar or two.

Additional partners include Olive Garden, Uber, AMC Theaters and Cinemark Theaters. 

Jain said he expects the service to be mainly used by wealthy Chinese nationals who may visit a New York Nike outlet and leave with six pairs of designer sneakers, or go on a shopping spree at Saks Fifth Avenue — bringing back designer goods more difficult to find in China.

“Brand originality is a big deal for a Chinese consumer,” said Jain. “They want your original Nike shoes.”

A previous version of this story stated that the WeChat partnership was being rolled out in 250 U.S. retailers. After publication, we learned that the partnership is being rolled out in 50 U.S. retailers. The article has been updated to reflect that figure.

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