In China, you pay for most things with a cellphone. Through mobile payment platforms such as Alipay and WeChat Pay, customers can scan a QR code in an app on their phone and pay for everything from groceries, to meals, to a souvenir purchased from a street vendor in a rural village. As millions of Chinese increasingly become tourists, attractions looking to profit from the influx of Chinese visitors are partnering with these mobile payment platforms.
This is a boon to Chinese visitors and the attractions they frequent, but another result is an expanding empire of Chinese-based mobile payments and, along with them, access to even more consumer data. Although a few keychains purchased with a phone in London aren’t so threatening, the growing dominance of Chinese mobile payment requires more scrutiny and should leave us asking how much privacy is an acceptable trade for convenience.
Merlin Entertainments, the company that owns many London attractions such as the London Eye and Madame Tussauds, recently partnered with Ant Financial, which operates Alipay, to allow Chinese visitors to pay for tickets and souvenirs via the mobile payment platform. Already, many retailers popular with well-off Chinese tourists, such as Harrods and Selfridges, accept Alipay.
Before landing in London, Alipay was already an option for Chinese tourists in popular, and closer, destinations such as Hong Kong, Japan, and Singapore. As outbound Chinese tourism continues to boom, it is likely to expand even further — building the global network that relies on Alipay for its convenience and lower transaction costs.
So, why is this a problem? Because there’s not a thick wall between Chinese industry and China’s Communist Party.
At the beginning of 2018, U.S. regulators turned down a planned buyout by Ant Financial of MoneyGram citing national security concerns and, specifically, the privacy of U.S. consumer data. Around the same time, Alipay sparked controversy among Chinese users over data sharing amid concerns of the development of a national “social credit” system.
For those concerned about privacy and specifically the safety of foreign consumer data that could be accesses and used by the Chinese government, these are valid concerns. Jack Ma, the executive chairman of both Alibaba Group Holdings Ltd and a joint owner of Ant Financial, is close to and supportive of the ruling Chinese Communist Party. If he weren’t, he wouldn’t be a successful businessman.
As Ma’s companies have grown, so has the government’s control over them. Measures such as forcing mobile payment platforms to route transactions through a government-mandated clearinghouse will likely result in not only more regulation but also great government access to transaction data.
As Chinese companies court tourist attractions, the bigger picture of how the world pays for goods and services is at stake. While Americans mostly rely on banks and plastic, their counterparts across the Pacific use third party payment platforms and QR codes. As this system expands, as it is currently through the influx of Chinese tourists, the U.S. financial system based on banks will soon see more competition from Chinese based mobile payment. Although mobile payment may be convenient, doing so on a Chinese platform will come at the cost of both personal privacy and national security.
By Erin Dunne