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PayPal’s Uphill Battle in China, Not a Challenge To Alipay and WeChat

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PayPal Holdings

Over the last few months, PayPal has been quietly gearing up for its expansion in China.

At the recent Boao Forum for Asia, China’s answer to Davos, the American payments giant said its strategy for China is not to challenge the duopoly of Alipay and WeChat Pay. Instead, it wants to focus on cross-border business and provide gateways both for Chinese merchants to collect funds and for Chinese consumers to pay for overseas goods.

It’s certainly a lucrative area. The market size of cross-border e-commerce in China surged from about 3 trillion yuan ($460 million) to nearly 6 trillion yuan between 2016 and 2021, according to market research firm iResearch.

But this space has also become crowded in recent years and PayPal may be late to the fray, said a China-based manager for an American tech giant, who asked for anonymity because he’s not authorized to speak to the media.

On Amazon, one of the largest marketplaces for Chinese exporters to sell online, there are already established options for merchants to collect funds. Setting up a bank account in a foreign country can be difficult for a small-time Chinese exporter, not to mention the high fees for remittance, so such merchants often seek third-party payments transfer solutions such as U.S.-based Payoneer and Chinese equivalents Pingpong and Lianlian, which charge a relatively small fee to deposit merchants’ sales into their bank accounts at home.

China has stringent policies for foreign exchange and electronic payments, but PayPal has already cleared the regulatory hurdles. In January, the American fintech titan became the first foreign firm to hold a license for an online payment processor in China after it bought out shares in a local payments firm.

Obtaining the government greenlight is just the first step. The appeal of PayPal hinges largely on what it can offer to Chinese e-commerce exporters, who are now flooding the likes of Amazon and eBay.

“At the end of the day, customers only care which service is the cheapest and easiest to use,” said the China-based manager from the American firm.

“The Chinese cross-border payment solutions have achieved impressive results in terms of products, scale, and fees,” the person said. “I don’t think PayPal stands a chance.”

Exporters who build their own online stores instead of selling on mainstream marketplaces may still find PayPal necessary as a tool to accept payments from customers, given the app’s wide reach.

As for cross-border payments, PayPal is competing with Tencent’s WeChat Pay and Ant Group’s Alipay, which have long been ubiquitous in China. Both e-wallets have been aggressively growing their global partnerships to let China’s outbound travelers pay at overseas retailers like they would at home. Those shopping for overseas products domestically often use Chinese-owned e-commerce apps, which tend to have Alipay or WeChat Pay as their payment processor. Credit cards never became prevalent in China.

Cross-border payments have also become one of Ant’s main growth goals, according to the prospectus of its now-halted initial public offering. While overseas businesses accounted for just about 5 percent of the firm’s revenue in the second half of 2020, most of that segment came from cross-border payments. At the time, Ant also had plans to spend HK$52.8 billion, or 40 percent, of the net proceeds from its IPO on expanding its cross-border payment and merchant services as well as other overseas functionalities.

“It depends on whether PayPal is able to offer even lower fees than Ant,” said a person who previously worked on cross-border wallets for a Chinese company. “But PayPal itself is not famous for low fees.”

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International Breweries To Train 500 Young Entrepreneurs Through Kickstart Initiative

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As part of its commitment to bringing people together for a better world and its objective of delivering impactful, developmental and sustainable projects, International Breweries Plc through its social investment arm, International Breweries Foundation has launched the 6th edition of its Kickstart entrepreneurship programme recently.

The initiative is targeted at enterprise growth and development for young entrepreneurs between the ages of 18 and 35.

During a media briefing to update the public on the process of this year’s edition, Managing Director, International Breweries Plc, Hugo Rocha expressed delight that the Kickstart Initiative had evolved from the regional programme it used to be, to an inclusive national programme that reaches the six geopolitical zones and 36 states of Nigeria.

“Over the years, we have held the conviction that the energy, zeal, and brilliance of the youths of Nigeria who constitute about 70 percent of the total population should be tapped and channelled to productive use. This is the logic behind Kickstart – to promote a culture of entrepreneurship among young people through training, provision of capital and mentorship,” Rocha said.

Rocha concluded his remarks on a high note, stating that, “as International Breweries celebrates its 50th Anniversary this year, I am pleased that the results of a 3-year impact assessment study that we commissioned on Kickstart came out positive and gives us the confidence to continue to support young people to achieve their dream of entrepreneurship. We remain steadfast in our commitment towards the economic development of Nigeria”

Also speaking at the press conference, Chairman, Advisory Board, International Breweries Foundation, Peter Bamkole explained that International Breweries Plc and its foundation is dedicated to continuing to contribute its quota towards tackling the twin challenges of unemployment and poverty while promoting Decent Work and Economic Growth in line with Goad 8 of the United Nations Sustainable Development Goal (UNSDGs).

“By creating Kickstart, International Breweries Foundation set out to be the nursery of innovation in a business where budding enterprise managers are groomed—held by the hand and taken through the rigour of entrepreneurial work. We aim to produce well-rounded entrepreneurs who understand and are prepared to put in the work it takes to do business successfully in a unique climate like ours.” Bamkole said.

Over the past five years, the Kickstart initiative has provided training, mentoring, and seed capital of N325,136 million (in total) for 274 grantees; 708 direct beneficiaries and 2,832 indirect beneficiaries across a wide range of business sectors; with the result of the creation of about 571 jobs and 1,392 new jobs projected across the six geopolitical zones of Nigeria.

Speaking on the mechanics of the award, Legal and Corporate Affairs Director, International Breweries Plc, Temitope Oguntokun revealed that the award is in three phases: the application phase, the training phase and the pitch fest phase which is the final selection of grantees by judges.

She explained that the Kickstart Initiative will be incorporating an expansive training module that will train 500 young entrepreneurs online, with a number of them going into the bootcamp. This year’s edition also features a streamlined search for entrepreneurs into Agriculture, Modular Retailing, Circular Packaging (Recycling), Technology, and Renewable Energy sectors.

“After a transparent selection process on the Enterprise Development Centre (EDC) platform via the link, https://reg.smetoolkit.ng/program-apply/kickstart-nigeria-2021, which will open on the 20th of May, successful applicants will be equipped with critical skills and training on entrepreneurship by experienced entrepreneurs and corporate professionals during a 2-day boot camp. They will partake at the pitch fest where a panel of judges will appraise their proposals before final selection. Winners of the pitch fest will then be awarded grants at the awards ceremony in Lagos,” Oguntokun noted.

The press launch which held last week in Lagos had in attendance dignitaries such as the Director for Employment, Lagos State Ministry of Wealth Creation and Employment, Mrs Iyabo Seriki-Bello, Director of Partnerships and Coordination for Small and Medium Enterprises Development Agency of Nigeria; Dr Friday Okpara; Chairman, Advisory Board, International Breweries Foundation, Mr Peter Bamkole; members of the International Breweries team, past Kickstart Alumni, mentors and a host of others joining online.

Following its trajectory of success, impact over the years, and its extensive yet immersive plans for the 6th edition, Kickstart, under the auspices of International Breweries and its foundation is geared towards transforming Nigeria into an economic powerhouse through the impact of entrepreneurship.

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More and More Under 30s Seeking Financial Advice

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A growing number of under 30s are seeking financial advice, according to data released by one of the world’s largest independent financial advisory and fintech organisations.

deVere Group has revealed that there has been a 54% year-on-year jump in the number of enquiries from potential clients under the age of 30 who are seeking to work with a professional adviser to devise and implement a financial planning strategy.

Nigel Green, chief executive and founder of deVere Group, comments: “The sharp increase in the number of under 30s seeking out advice, once again, debunks the myth that younger generations are not interested in building a plan for their long-term financial security.

“It would be a reasonable assumption to make that the year-on-year increase has been largely driven by the pandemic.

“It has brought into all-too-real focus how things can quickly change, how important it is to have a back-up/emergency plan, and value more than ever what really matters to them. For most, this includes ensuring that they can enjoy the opportunities and lifestyle that they desire.”

In March this year, a deVere poll of 450 clients found that seven out of 10 people will not splurge excessive savings accumulated over the pandemic.

When asked ‘Are you likely to spend the majority of the extra money you have managed to save over the last 12 months?’ 72% responded ‘no’, 16% said ‘yes’ and 12% ‘did not know.’

Mr Green continues: “Whilst it’s a fool’s game to generalise about any given cohort, anecdotally, our advisers who are working with the under 30s report that there are some definite trends.

“Perhaps unsurprisingly, more than other generations, the under 30s – who are ‘digital natives’ having grown up under the ubiquitous influence of the internet and other technologies – demand digital solutions such as fintech apps alongside their personalised financial advice.

“This gives them immediate, on-the-go, low-cost access to, use and management of their money.”

Another trend, says the deVere CEO, is impactful saving and investing.

“Our advisers say that, typically, younger people want to use their savings and their investments not only to improve their own lifestyles but for the betterment of their communities and the environments.

“Having more control over their financial affairs is a critical part of their wider activism on issues such as human rights and climate change.”
Mr Green concludes: “Perhaps more than ever, the under 30s are showing a desire to be financially resilient and put their long-term financial goals at the heart of their decision-making process.

“I believe that this ‘think about tomorrow first’ attitude is likely to be a permanent phenomenon due to recent seismic cultural, social and economic shifts.”

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Econet Group and Mastercard To Collaborate on Fintech Solutions For Covid-19 Response in Africa

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The Econet Group through its subsidiary Cassava Fintech International (Cassava Fintech) and Mastercard have entered into a strategic partnership to advance digital inclusion across Africa and collaborate on a range of initiatives including expansion of the Africa CDC TravelPass.

TravelPass is a digital health pass developed by Cassava Fintech and offered in conjunction with the Africa Centres for Disease Control and Prevention (Africa CDC). It is accessible to users of Cassava Fintech’s Sasai SuperApp and is recognised as one of the leading initiatives in the fight against the cross-border spread of Covid-19 in Africa. Mastercard is partnering with Cassava Fintech to enhance the security of TravelPass through Mastercard’s Community Pass platform. Mastercard Community Pass is an interoperable digital platform facilitating service delivery for marginalised individuals and communities, including access to critical health services like patient care plan tracking for Covid-19.

The joint initiative between Mastercard and Cassava Fintech seeks to offer a unified solution with greater convenience and enhanced security, that is expected to promote safe cross border travel in Africa in response to the Covid-19 pandemic.

The partnership will also allow the two organizations to explore collaboration such as the further integration of the Community Pass with Cassava Fintech’s mobile and financial services, acquiring and processing of card payments across the continent, along with the introduction of a virtual or physical card on the Sasai SuperApp.

Cassava Fintech’s CEO, Darlington Mandivenga said the partnership with Mastercard would pave the way for both companies to jointly tackle the challenges facing African economies as they re-open post the COVID-19 pandemic.

“We are excited to work with Mastercard to explore solutions that will, among other things, mitigate the risk of falsified presentation of a third party’s Travel Pass at access and transit points,” Mandivenga said, adding that the same technology could also be used in payment solutions.

Cassava Fintech uses an integrated model to provide financial and digital services to ensure a “financially inclusive future that leaves no African behind”.

“We look forward to joining hands with Cassava Fintech in exploring new solutions that will make a difference and benefit the continent. In addition to digital innovation for future travel, Cassava will also leverage our secure payments network to advance access to financial services,” said Mark Elliott, Divisional President, Southern Africa, Mastercard.

Mastercard is a leading global technology company focused on building an inclusive, sustainable digital economy that benefits everyone, everywhere, by making transactions safe, simple, smart and accessible.

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