This summer I spent a month in Beijing. I’d last lived in China in 2016, and I was relieved to find my favorite noodle shops in their usual niches. But this time round, navigating the city felt inexplicably different. The cabs I tried to hail passed me by. On the subway, other riders jostled past me, swiping their phones at the turnstiles as I fumbled with my ticket. When I tried to sneak into the cafeteria in Renmin University for a cheap lunch, clutching my grubby backpack, I made it past the guards only to be stopped at the cash register—apart from student cards, the only form of payment accepted was Alipay.
It gradually dawned on me that that was why Beijing felt like a different city from the one I knew: in the two years since I’d left, the whole city had switched over to mobile payments on China-specific platforms to which I, a foreigner, had no access. These days in Beijing, the green and blue logos of mobile payment providers WeChat Pay and Alipay appear everywhere, from breakfast stalls to five-star hotels.
Just about every foreigner who’s visited China in the last ten years comments on the dizzying speed at which physical infrastructure is built. When I first moved to Shanghai in 2012, I worked in the city’s financial district, home to a skyscraper nicknamed the “bottle opener”: according to Wikipedia, it’s the world’s tallest building with a hole in it. But these days, China’s part in the race to build the world’s tallest building appears to be waning. China’s much-vaunted speed in infrastructure building has more recently been directed at the digital rather than the physical world.
This year alone, Chinese tech companies such as the social e-commerce company Pinduoduo and food delivery platform Meituan Dianping raised billions in IPOs on international markets. Chinese online spending during “Singles Day,” a one-day online sale event in November, far exceeded American spending over the Black Friday and Cyber Monday weekend.
Until just a few years ago, before smartphone purchases were ubiquitous, cash was king in China. Online purchases were generally made using offline payments, in part because credit cards have never been widely used. To buy a plane ticket via the internet five years ago, you could pay by following a link to your bank account, but that was a cumbersome process supported by a relatively small number of banks. If you didn’t have an account with the right bank, a courier would bring you the physical ticket the same day so you could pay for it with a wad of cash.
These days, cash has been almost entirely replaced by mobile payments in transactions both online and offline. The only accessory nearly as important as a smartphone is a portable charger: at most cafes and restaurants in big cities, you can rent a charger for several cents to fire up a phone that’s low on juice. Startups that supply these chargers, such as Laidian and Xiaodian, are themselves worth tens of millions of dollars.
The Everywhere Store
The two biggest mobile payment providers, WeChat Pay and Alipay, belong to tech giants Tencent Holdings and Ant Financial. WeChat Pay is fully integrated into WeChat, the dominant Chinese app for messaging, social media, as well as just about everything—a Twitter, WhatsApp, Google Maps, Venmo, and Yelp rolled into one. Alipay started life as an escrow service for transactions on the e-commerce platform Alibaba in 2004 and began offering mobile payments in 2008, though uptake of the app has been fastest over the past five years.
WeChat Pay’s big break came in 2014: as a promotional feature for the Lunar New Year, China’s biggest holiday, users were prompted to send digital “red packets”—the cash gifts customary at the new year—to friends and family on WeChat. Would-be recipients had to sign up for WeChat Pay; tens of millions did. Before long, WeChat was a serious player in the mobile payments market. Between 2015 and 2016, mobile payments in China quadrupled; today, more than 80% of Chinese smartphone users have used their phone to make a payment.
With ubiquitous mobile payments, anything from a cup of soy milk to a pricey imported blouse can be bought using your phone. American consumers are used to a minimum amount below which smaller shops may not accept a credit card: with mobile payments, no charge is too minor, as evidenced by the enterprising homeless people who hold up QR codes instead of begging bowls.
On WeChat, you can make plans to meet a friend for dinner, look up directions to the restaurant, and pay the bill, all on the same app. Passengers on high-speed trains can pre-order meals to be delivered to their seats at the next station, and a handful of KFC restaurants in major cities are trialing mobile payment by facial recognition. The combination of convenient mobile payments and cheap courier services means that nearly any of the vast array of things made in China can be bought directly from their producers by urban consumers.
Over the past decade, China has systematically blackballed foreign apps. Didi Chuxing bought Uber’s China operations in 2016; Google, Facebook, and other US-based platforms have long been banned (though Google is reportedly planning a comeback). But with the growing ubiquity of mobile payments in daily life, China may also be excluding foreign users from its domestic platforms. Thus far, the major payment apps haven’t made significant efforts to reach potential users who are not holders of Chinese bank accounts, such as the tens of millions of foreign tourists who visit China each year, or the mostly rural domestic unbanked population.
For tourists, accessing the mobile system is prohibitively difficult: expats can generally do so by opening a domestic bank account with a valid proof of residence. Although both of the major payment apps say they have started integrating foreign credit cards, users report that the integration hardly ever works. China has long wooed foreign tourists, so at first glance this lacuna may seem puzzling: why make it more difficult for tourists to part with their money?
The answer has little to do with technological limitations. Mobile technology is increasingly serving as the vehicle for a sophisticated national surveillance system that’s deeply intertwined with all kinds of necessary everyday transactions. If your phone knows where you got out of a cab and with whom you split the bill for lunch, then the Chinese government knows too.
Both WeChat and Alipay already require users to sign up using their legal names. An ambitious move to enable WeChat to function as a legally valid form of identification is underway. Chinese authorities are experimenting with all kinds of surveillance technology, from closed-circuit cameras trained on jaywalkers to facial-recognition glasses that allow the wearer to determine a person’s identity. But in the meantime, mobile-payment providers are already collecting a wealth of data that they are legally bound to share with the government. In comparison with using this data to tighten state control, accommodating foreign users is a relatively low priority. In fact, permitting users to pay with foreign credit cards would introduce an additional element into the equation, one that would be harder for Chinese authorities to monitor and manage.
It wasn’t so long ago that China’s economic policies and reforms were framed in terms of opening the country up to the outside world. As recently as the 2008 Beijing Olympics, authorities were going out of their way to impress foreign visitors, opening new subway lines and offering free wireless internet access throughout the capital. But over the past few years, appealing to foreigners and accommodating their needs has become less important to Chinese authorities and domestic companies.
The shift in focus to homegrown digital innovation and mobile technology suggests a change in the government’s priorities. These days, China hardly cares to impress the outside world with its rapid pace of development and enlightened policies. Rather, it is building a new, parallel world, a digital infrastructure that will fully capture its growing domestic market while permitting an impressive degree of social control in Chinese cities.
To that end, WeChat Pay and Alipay are prioritizing the reverse form of expansion: instead of catering to foreign tourists in China, they’ve calculated that it’s more lucrative to target Chinese tourists abroad. Both companies are competing to woo foreign airports with promises of more Chinese spending. At the Helsinki airport, one of the first European airports to offer Alipay, a spokesman states that Chinese tourists spend more than any other group of travelers. At the Mountain View, California outlet of 99 Ranch, a Taiwanese-American supermarket chain, the checkout counters are festooned with banners proclaiming that the store accepts Alipay. Teddy Chow, a marketing manager, says that discounts encouraging shoppers to use Alipay and WeChat Pay are paid for by the payment providers rather than by the supermarket itself.
For Chinese users, the expansion of WeChat Pay and Alipay offers the convenience of paying abroad as if they were at home, and allows them to legally circumvent currency controls governing how much renminbi each individual can take out of the country. For Las Vegas taxicabs and London department stores, offering Chinese mobile payment options allows them to capture more tourist spending without the pesky inconveniences of foreign currency conversion. And for the authorities, WeChat Pay and Alipay will permit them to track Chinese users even when they’re in foreign countries.
Notably, even in their overseas forays, Chinese platforms show little interest in targeting foreign users; their aim is to capture Chinese spending elsewhere. Given that Chinese tech firms have far surpassed foreign analogues in the seamlessness of the experience they offer, the fact that they’re not interested in exporting this technology shows that the Chinese government’s first concern is to tighten its domestic grip on power.
Throughout my time in China, the act of paying with coins and notes while everyone else around me brandished a smartphone reminded me that tourists inevitably inhabit a world parallel to that of the locals they brush past on the street. I’d lived in China for years: never before had each daily interaction so clearly reminded me that I was an outsider. Friends constantly told me how surprised they were that it’s possible to get around Beijing in 2018 without WeChat Pay or Alipay. I, for one, was surprised that so many of them told me they didn’t carry cash or credit cards when they left home—just their smartphones.
One evening on the subway, a gangly guy tried to badger me into joining his runners’ club by scanning a QR code on his phone. He was clean-shaven and soft-spoken, doggedly making use of every last moment while a screen above us counted down the minutes and seconds until the next train would arrive. He showed me the QR code on his screen, flanked by a profile picture of a scantily clad woman who was not in running gear. Even though I figured I probably couldn’t be scammed out of money that wasn’t on my phone, I said no.