Want Access to Chinese Remittances? You Need to Crack Alipay

With global remittances expected to grow by more than 4% this year, providers are utilizing mobile and other digital technologies to ensure sending money between countries is easier than ever.

China, the world’s most populous country, has citizens all over the world, and huge amounts of money are flowing back and forth, which should make bankers think, How can I get in on that action? This is especially true as banks and fintechs keep competing for the market, with banks calling on their decades of regulatory prowess (while fintechs keep updating their technology ).

But as with any form of money movement involving China, foreign banks and fintechs alike looking to crack the market in Asia still need to grapple with mobile payment services Alipay and WeChat Pay. Global remittances are expected to grow to $642 billion in 2018, according to recent data from World Bank. and as of now, partnering with either mobile service for money movement outside of the country remains… tricky.

With the stranglehold both services have on Chinese payments, fostering such a relationship with either Alipay or WeChat Pay remains a startup or bank’s best bet for a shot at Chinese payments. Banks have an answer to fintechs’ challenge in the remittance space — licenses, and access to existing global payment networks. But banks often price their service at twice the rate startups charge, opening the way for challengers such as Pangea.

“That’s something that we’re working on; [Alipay and WeChat] don’t allow foreign funds to terminate in those wallets,” Nishu Thrukal, CEO of mobile remittance provider Pangea, told Bank Innovation. “We are deep in the various regulations [of it].”

China would be the next market in Asia tackled by Pangea, which allows users to send money from a bank account or debit card to another bank account via mobile. The company expects to see “things opening up” in regards to regulatory talks in China within the next three to six months, Thrukal said, though as yet there is no partnership plan in place for either Chinese payment service.

The company expanded to Asia last fall, said Thrukal, adding Singapore, Thailand, and Vietnam to the list of countries it supports (all payments initiate from the U.S.). Remittance, like most of financials services, is “highly regulated,” according to Thrukal, and might grow more so as customers grow increasingly used to mobile experiences.

“We’re seeing the same effect as Amazon [in remittances],” Thrukal said, noting that customers are growing to expect their money to move in real-time, even when sending cross-country.

While the company does not share specific customer or transaction numbers, he said, its “hundreds of thousands” of customers have started using Pangea’s app two and a half times per month on average.

When it comes to China, where payments of all kinds have already (quite successfully) migrated to mobile, speed and efficiency are paramount. For this, Thrukal and Pangea are examining the potential use cases of blockchain technology for remittance payments.

When asked if the company was looking to work with other companies already successfully using blockchain for cross-border transactions, like Ripple, Thrukal hedged, “We’re talking to everyone. Each of these [companies] have various opportunities.”

The company added that its blockchain efforts will probably begin with its “U.S. to Mexico corridor first,” before expanding to other markets, though there is no set date for the application of the technology.

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