Western Union is now processing WeChat Pay transactions internationally out of China, as part of a broader push to enable various wallets and payment ecosystems to connect across borders.
Adam Tiberi, San Francisco-based chief product and innovation officer at Western Union, says the service will be unveiled this week.
“We’re going to see more wallet ecosystems connect cross-border,” Tiberi told DigFin.
Mobile payments have emerged from domestic environments – whether it’s via WeChat, from gaming; or Alipay, from e-commerce; or Facebook Messenger, Viber or other tech platforms. As a result their payment capabilities vary, and the corporations behind these webs of partnerships and platforms are all fighting to grow by attracting and keeping people on their apps.
Where apps meet
Tiberi says Western Union’s strategy is to find ways to, first, cater to them, by helping them reach merchants or consumers across the remittance company’s network of licensed entities around the world; and secondly, to develop ways to enable payments across these competing ecosystems.
For example, a family in China can use Alipay to, say, pay for the tuition at an American university, because Alipay’s origins are in commerce. But a family in China can’t today use WeChat Pay for such a large-ticket transaction, because the KYC and other controls haven’t been designed for such purposes.
Western Union is working with banks and with collection agencies such as Geoswift to provide the means to expand payment options out of China.
“Wallets are playing a big part” in crossborder payments, Tiberi said, “but you still need a bank on the other side, and an intermediary to connect them.”
Moreover, when it comes to cross-border transactions, there is a foreign-exchange requirement, something that these apps were never designed to process.
Western Union is keen to handle the FX and facilitate settlement in international mobile payments, Tiberi says. There may also be a reporting and compliance service for countries, such as China, with restrictions on capital flows.
“We’ll see ecosystems start to come together by the end of the year,” Tiberi said.
To make this happen involves working with tech companies to ensure their payment apps provide a good user experience, one that tells users what other apps can accept their payment requests if their preferred platform cannot, due to weak KYC rules or other barriers.
Noting WeChat Pay’s claim of 800 million active users or Facebook Messenger’s 1 billion globally, Tiberi said, “If we can embed that functionality inside their app, we’re talking big transaction amounts.”
And even if this means some payments must be executed on a rival’s app, tech companies are open to this because it extends their service offering and convenience, which means retaining users.
In 2015, Western Union and Tencent, the parent company of WeChat, agreed to let WeChat users in the U.S. send money to a Western Union retail location, or to a bank account or digital wallet. But until now, for someone in mainland China to send money internationally, they could only do so to recipients who had Chinese wallets. This new arrangement is the start of broadening the ability for Chinese users to send payments over non-Chinese rails.