The White House is thinking about restricting or even banning the two biggest online payment systems in China, according to a Bloomberg report. And this move may affect more than just Alibaba and Tencent themselves.
As the two most widely used payment systems in China, Alipay and WeChat Pay have gone far beyond China. If a restriction on Chinese payment systems is implemented, companies depending on Chinese tourists and residents from China will be the first to suffer.
For example, Alipay formed a partnership with the payment service company First Data Corp in 2017, allowing 4 million US stores to accept Alipay. Most of these stores are located around tourist attractions.
DFS is among the stores that provides Alipay services in the US. Bookstore chain Hudson News also connected with Alipay since 2017. Some luxury brands including Gucci, Coach, Prada, Hermes, Rebecca Minkoff and LV all have stores in New York, Los Angeles and San Francisco that support the Alipay service. These used to be the popular go-to places for Chinese consumers.
Card payment networks will also be affected, as they have close ties with Alipay and WeChat. Visa and Mastercard started to add their cards into Alipay and WeChat since November last year. American Express, the New York-headquartered financial service group, just got permission in June to start clearing services in China.
If the ban on Alipay is similar to what Trump wanted to impose on WeChat—a ban on any business with US companies—it will affect all US companies that have business in China. From consumer brands such as McDonald's to Nike to tech brands such as Apple, Microsoft, all will be affected.
Any change would also affect the Chinese community living and studying in the US. There are about 1.1 million Chinese citizens with permanent residence in the US, and about 360,000 Chinese students who study there, according to the data from the Chinese government. These groups of people, who are so used to using Taobao and WeChat, will be locked out of those services if the White House imposes a ban.