Mobile and alternative payments market in China/online travel agenices

Part
01
of four
Part
01

Overview - Mobile Payments Market In China

Powered by the rapid and widespread adoption of online retail, financial and on-demand services, China is experiencing a boom in its mobile payment market. Between January 2017 and October 2017, there were $12.8 trillion worth of mobile payment transactions in China. Chinese people are using mobile payment services to pay for everything from smartphone game upgrades and food delivery to movie tickets and electronics.

Research firm eMarketer estimated that 61 percent of all global mobile payment transactions in 2018 would be from China. The firm also estimates that 79.3 percent of Chinese customers would be using mobile payments at point-of-sales by 2021.

Payment Options

As per the market shares in 2016 Q4, the most popular payment options in the Chinese market are:


Launched in 2004, Alipay is an e-wallet with QR code payment option that is used on the Taobao and Tmall websites, the most popular Chinese online marketplaces. As of 2016 Q1, this platform had 400 million users. It provides scanning options for customers and merchants as well as soundwave payment options. The e-wallet is connected to the credit card account or pre-deposited money of the user. Its features include peer-to-peer payment, digital storage of documents and cross-border payments.

* TenPay (WeChat Pay) - 37 percent

Launched in 2014 by Tencent, it is an e-wallet with QR code payment option that provides payment by scanning options for customers and merchants. As of 2016 Q1, this platform had 300 million users. The e-wallet is connected to the credit card account or pre-deposited money of the user. Its features include digital gaming currency, wealth management, in-app access to e-commerce sites and payment of tips to content creators.

* Other payment methods include 1qianbao (2 percent), Union Mobile Financial Pay (1 percent), LianLian Pay (1 percent), Baidu Wallet (less than 1 percent), Union Pay (less than 1 percent), YeePay (less than 1 percent) and 99Bill (less than 1 percent).


It is a near-field communication (NFC) based mobile payment system launched in 2016 by Apple. Apple Pay has yet to capture a significant market share in China. As of 2016 Q1, this platform had a little more than 38 million users in China. The main method of payment is by placing the Apple device on top of the point-of-sale (POS) terminals. This service is available in only selected regions of China.

Unique features

* With a share of almost 58 percent, e-wallet services dominate the mobile payment market. Due to government regulations and security concerns, most of the payment options are either based on near-field communication (NFC) technologies or QR code technologies. NFC technologies require the user to scan their phones at specific POS terminals only.

* During the Chinese New Year, many of the payment platforms launch peer-to-peer payment features that allow the users to send the traditional red envelopes with cash to their family and relatives. In 2016, WeChat delivered 8.08 billion digital red envelopes. During a broadcast of the China Central Television’s Spring Festival Gala, an annual TV event watched by an estimated 700 million people, the Tencent app encouraged the viewers to shake their phones for a chance to win a combined $80 million in red envelopes from corporate sponsors.

* Beginning in 2018, the People’s Bank of China (PBOC), the central bank, will require all electronic and mobile payments to go through a new central bank payments clearing platform, called Wanglian. This system has been established to check the capital outflows and monitor transactions for money laundering and fraud.

* The e-wallets like WeChat Pay provide different features like digital gaming currency, option to split bills amongst friends, pay phone and utility bills, connect with strangers by shaking the phone and access various e-commerce sites in-app.

* Mobile payments are also being used to pay at offline stores through the "scan-and-pay" method. According to China Channel, over 90 percent of Chinese consumers use mobile payment methods to pay for offline purchases, as compared with only a 32 percent adoption rate for debit and credit cards.

* Many e-wallets also allow the users to send micro-payments to content creators like writers, musicians, and artists as tips for their services.

* Many e-wallets like Alipay allow the user to digitize and store their bank or credit cards and other important documents like the identification card, driving license and property deeds.

In conclusion, the significant mobile payment options in China are Alipay and WeChat Pay. The unique features of the Chinese payment marketplace include payments through e-wallets and the ability to send red envelopes and tips to other users.
Part
02
of four
Part
02

Overview - Mobile Payments Market In China: Trends

In China, 65% of tourists make use of mobile payment platforms. 91% would even spend more if their mobile payment platform is supported by merchants overseas. Mobile payment is almost an everyday routine in China, this is confirmed by the fact that 70% of the general population of China utilizes mobile payment in one way or another.

For this research, we searched China National Tourism Administration statistics, recent surveys from trusted firms, press releases and media pages to determine the current trends in the mobile payment market in China. As requested by the scope of this research, we focused our efforts on the recent trends that are specifically related to the travel and hospitality sector in China. Below is a deep dive into our research.

Overview of Mobile Payments Market In China

Mobile payment platform usage is a trend in China that is currently on the rise. Traveling has become a key aspect in the rapidly growing affluent population in China. A 2017 survey by Nielsen and Alipay revealed that 65% of Chinese tourists use mobile payments. The study revealed that 91% would be more "willing to spend if overseas merchants accepted Chinese mobile payment brands". It is estimated that the average spend of an individual Chinese traveler would increase by 3% from 2017 to $5,715 in 2018.

Sebastien Bazin, CEO of French hotel AccoHotel, predicted that within the next 24 months, over 90% of transactions in the Chinese market would be by mobile payment rather than cash or electronic card. As such, they intend to key into the new trend within the next 12-18 months. Also, Marriott International went into partnership with Alipay to integrate mobile payment for transactions within their hotel to be in line with current trends in the country. According to the survey, cash and electronic cards are the top transaction payment procedure among Chinese travelers at 30% and 42% respectively; mobile payments are currently making forward strides in the Chinese tourist market with 28% of transactions done through this means. The percentage of cash transactions in China has been on the decline while mobile payments have been on the rise for the past two years. Over the past 24 months, 77% of respondents agreed to have spent more money in their recent travels using mobile payment platforms than before.

trends in china mobile payments

In China, 70% of the general population utilizes mobile payment in one way or the other. Mobile payments have been adopted mostly in the Chinese food industry, however, 62% of transportation payments, 57% of hotel expenses, and 56% of tourist attractions bills are been made over mobile payments. That shows the level of the penetration of mobile payment in China.

The survey listed the reasons why Chinese tourists utilize mobile payment. Most notably, 64% of tourists noted ‘convenience, speed, and familiarity’ as their main reasons for using mobile payments. For Chinese consumers, 63% reported spending their money on shopping using mobile payment. Other notable spend categories by Chinese tourists that was reported by the survey are 62% of tourists using mobile payment for dining bills, 58% agreed to have used it for tourist attraction bills, 52% reported to have used mobile payment for accommodation expenses, 48% utilized mobile payment for local transportation, while 47% have used mobile payment for recreation expenses. Going forward, 76% of the respondents expect to use mobile payments for shopping overseas, 46% for dining, and 40% for accommodation when next they travel. For younger Chinese tourists born after the 90s, 33% utilize mobile payments when overseas, while 28% for post-80s and 23% for post-70s.

Also, the survey reported that recently, more overseas merchants now support mobile payments over the past two years as reported by 84% of Chinese tourists surveyed, whereas 16% doesn't seem to have seen any difference in this aspect. 38% of tourists who reported not to have used mobile payments noted that the reason was as a result of non-acceptance of their mobile payment platform by merchants in their destinations, among other reasons.

chinese mobile payment providers

Alipay is a key player in the Chinese mobile payment market, with 99% of respondents having Alipay app on their mobile phones. 63% agreed to have used it for payments during their travels. The use of Alipay by Chinese tourists is more prominent among post-90s, with 67% utilizing the Alipay app. They are followed closely by post-80s at 65%. An interesting statistic from the survey on acceptance of Alipay by overseas merchants revealed that 94% of respondents would choose Alipay as their payment portal among other options, 92% would consider patronizing that merchant, while 91% would even consider spending more if Alipay is accepted by the merchant.

WeChat Pay and UnionPay are other important players in the Chinese mobile payment market. The Chinese mobile payment market oversaw over $12.8 trillion transactions last year, "making it the world’s largest mobile payment market". China is predicted to remain the leading market for mobile payments, rising at a CAGR of 35.1% from 2016 to 2022. Alipay and WeChat Pay have a combined 90% of the Chinese mobile payment market share. In 2016, a combined total of $2.9 trillion transactions were completed through Alipay and WeChat Pay payment platforms, "a 20-fold increase in just four years"

conclusion

To wrap up, 65% of Chinese tourists use mobile payment portals. 64% of tourists that use mobile payment platforms noted ‘convenience, speed, and familiarity’ as their primary reasons for using mobile payments. Chinese tourists notably utilize mobile payment platforms to pay for their shopping, feeding, tourist attraction, accommodation, and transportation bills etc.
Part
03
of four
Part
03

Overview - Online Travel Agency (OTA) marketplace

Below is an overview of the market size (in revenue) and trends of online travel agencies, as it relates to North America. Top travel agencies within the United States are included, as they relate to index. The top five online travel agencies are also listed, with top-level facts listed as it relates to each (e.g. percentage of sales that are leisure, other brands they own, etc.). Trends in the online travel marketplace follow, which include a few trends that relate specifically to hotels. Please note, where applicable, United States-specific and hotel-specific data and information has been provided, however this information was not publicly available across all statistics. In those instances, global or North American data has been provided and noted.

DEFINITIONS

For the purpose of this write-up, Online Travel Agency has been defined according to the following definition:

"The online travel industry is primarily made up of travel e-commerce sites and review sites. Travel e-commerce sites specialize in the selling of travel products such as flights, hotels, and rental cars."

NORTH AMERICAN TOP ONLINE TRAVEL AGENCIES

In 2017, online travel sales in North America were $200.05 billion USD. This amount is projected to grow to $209.20 billion USD by the end of 2018 and reach $232.49 billion USD by the end of 2021. Globally, as of 2016, the top three travel agencies by revenue include Expedia, Inc. ($72.4 billion), Priceline Group ($68.1 billion), and American Express Global Business Travel ($31.1 billion).

Please note, revenue information as it specifically relates to just online hotel transactions in the U.S. within the online travel agency industry is not publicly available as revenue is only reported as a total figure, without any breakdown by type of travel product. For example, Expedia report the split of revenue between its various brands (by segment) and also by business model, but does not detail of split between hotel, flights and other types of products nor does it provide a geographical breakdown. Similarly, Priceline Group only breakdown revenue by business model.

Looking at 2017 data by index ranking, specifically within the United States, Expedia is the leading travel agency (index of 16.4), followed by Travelocity at 13.3 and Trivago at 12.2. Please note, all three top agencies in the United States are owned by the parent company, Expedia, Inc.

TOP ONLINE TRAVEL AGENCIES IN THE uNITED States


2017 index, United States: 16.4
2016 revenue, global: $72.4 billion

91% of sales are from leisure travel, with the remaining 9% coming from business transactions. Brands that fall under Expedia, Inc. include Expedia.com, Hotwire.com, Hotels.com, Trivago, Travelocity, CarRentals.com, and HomeAway.


2017 index, United States: 11.2
2016 revenue, global: $68.1 billion

Booking.com, Priceline.com, and Kayak.com all fall underneath Priceline Group.

3: AMERICAN EXPRESS GLOBAL BUSINESS TRAVEL

2017 index, United States: NA
2016 revenue, global: $31.1 billion

Company is in the process of moving to a cloud-based infrastructure, which will benefit corporate clients.


2017 index, United States: NA
2016 revenue, global: $24.6 billion

BCD Travel is a privately held company, so little to no information is publicly available. According to their website, BCD is looking to grow their technology offers for their customers, including helping travelers re-book trips and find meeting rooms at their hotels prior to arrival.


2017 index, United States: NA
2016 revenue, global: $22.4 billion

Almost exclusively for business travel (91.9%), with 4.9% of sales classified as leisure and 3.2% as other. WorldMate falls under Carlson Wagonlit Travel, which is a mobile technology for business travelers that helps manage itineraries. The company is looking to begin mobile flight booking in upcoming years.

TRENDS

MOBILE
It is estimated that over 1/3 of all online travel bookings take place on a mobile device. In Q4 of 2017 (worldwide), 33% of all hotel online travel bookings took place on a smartphone, with 33% of car rentals booked by smartphone and 25% of travel activities. Further, 41% of last minute travel in Q4 2017 (worldwide) was booked via an online agency travel app. When it came to conversion rates, apps saw a 5x higher conversion rate compared to a regular mobile browser. With the growth and success of mobile technology for online travel agencies, the usage is expected to grow throughout 2018.
A large trend in 2017 was the use of a “seamless interaction” between booking channels (e.g. starting to book a hotel on your desktop at work, and finishing on your phone while on your bus ride home). An example is Expedia’s Guest Scratchpad, which allows customers to write down notes that they can access from other devices.
More booking companies (e.g. Google Trips, Expedia, Stayful, TripAdvisor) are working on options to book things quickly, through one-click checkout options.
Sites such as Lola and Reservations.com are improving their game when it comes to customer service, providing “immediate phone assistance…who can help suggest and find hotel deals based on specific preferences.”
This relates primarily to Google — in 2017, they began promoting tools such as Google Daydream and Google Expedition which allow customers to virtually look at their travel destinations (E.g. hotel rooms, beaches, cities, etc.).

Along the lines of virtual reality, is the use of Artificial Intelligence (chat bots, personal assistants answering questions in travel apps, etc.). Examples already in play include Google Flight’s “predictive pricing”.
More sites are starting to gather data on their users through their search preferences and purchase history to provide further options for travel ideas.
SOCIAL
Utilizing social for recommendations is a growing trend. Companies are using Facebook friends and LinkedIn connections to see who has recommended travel sites, hotels, destinations, activities, etc.
Winding Tree is a travel platform that is utilizing block chain technology to guarantee control of their inventory and reduce costs for their suppliers, and the usage of block chain technology is expected to grow in the online travel market as it becomes more widely understood.

It is important to note the global growth of the online travel market China. China is projected to become the largest tourism market by 2022, and as of 2017, the country had the highest source of bookings in Asia (after combined data of China and Japan).

SUMMARY

The online travel agency marketplace is growing, and is expected to reach a global revenue of $232.49 billion USD by the end of 2021. In the United States, companies such as Expedia and Priceline are the top online travel agencies in the country. Current and emerging trends in the industry include the use of mobile devices for booking, utilizing artificial intelligence to provide chat bots for customers, and creating a seamless interaction for customers across numerous devices.
Part
04
of four
Part
04

New, Emerging, and Unique Approaches to Customer/Consumer Loyalty.

Introduction

We have carried out a thorough research of the trends of brand loyalty and highlighted the most important and unique ones. We'll start the response by addressing them, and then provide a list of examples of successful brand loyalty programs.

TRENDS

The effectiveness of omnichannel along with multichannel programs is causing them to rise in popularity. Multichannel program is a service that rewards loyalty by connecting customers across multiple touch points (or all in case of omnichannels) to different brands. The programs include rewards for money spent or the customer's engagement across multiple channels, and in return help brands in personalizing communications and customer experiences. A good example would be Tarte's, whose loyalty program "tarte <3 rewards" rewards users for spending money on their products and for bringing in new customers and members, by sharing on social networks, referring friends or sending emails, which help immensely in promoting the brand.

A survey was conducted to test the relationship between customer satisfaction and personalization. There was a significant correlation, with 79% of customers being "very satisfied with loyalty programs with high personalization" and a 2.7 times increase in satisfied members of personalized programs. Multichannel programs help with the acquisition of personalized data, which customers have no problem sharing when it's used to provide a more satisfactory experience. The data can also be used to provide personalized recommendations like relevant promotions, offers, products or services. Since customers now expect brands to offer more sophisticated loyalty programs, and since they are of great value if not central to customers, companies looking to retain their customers should start investing in this area. DSW rewards program, for example, notified its members on the number of points needed to collect a $10 certificate, what other deals they may be eligible for and a snapshot of the interaction between the customer and the brand. The program was successful, with 58.82% customers reading their emails for more than 15 seconds.

In order to grow and add value, brands have been increasingly looking for partnerships. A good example would be Wyndham Rewards, the number one program by Forbes, that partnered with Total Rewards, a casino-based program by Caesars Entertainment. The partnership gave both companies access to over 50 million members.

It has also been shown that the customers are expecting brands to have a socially responsible purpose, and that they shouldn't only focus on profits. The study that focused on millennials found that 81% of them agree with this, and 66% of consumers are ready to pay extra to companies with positive environmental and social purposes. Since this can be a big factor of loyalty to a brand, TOMS Passport Rewards have implemented a system where the members can support charities by redeeming points.

With Amazon Prime driving the demand for premium loyalty programs, different companies have started to copy and launch their own and unique ones. Studies have confirmed that fact, with 62% of respondents saying that they're willing to pay for them, and even more of millennials (75%), if the option by their favorite company arose. The PowerUp Rewards offers a premium program with over 50 million memberships already, is said to bring in 3 times more the sales as opposed to the non-premium program. Based on positive feedback, they even added a new and more exclusive level of their premium program.

One of the key "unique drivers of loyalty" is emotion, so the companies should focus a part of their resources in developing strategies that evoke and expand emotions for the brand if they want to keep their customers loyal. Many customers are even willing to choose their brands when faced with potentially better alternatives. On average, they spend about 46% more on products or services from companies that they have an emotional connection with. Companies are already investing in strategies that add value beside discounts and offers, that are aimed at providing an emotional connection between the company and customer. The Walking Dead program offers the "money-can’t-buy experiences and rewards".

The new and unique strategy is the introduction of chat bot technology. With many companies investing in chat bots, they are projected to 85% of customer interactions by 2020. They are most efficiently utilized in tasks that involve common customer-related problems, like the placement of orders. Customers will also be able to use voice-activated technology to place orders. Facebook Messenger, for example, added a chat bot by 7-Eleven to further increase the quality of customer experience.

As desktop sales are decreasing in popularity, mobile sales are recording a rise, as witnessed by the fact that on Black Friday, 64% of sales were done through a mobile phone. Brands should start focusing on developing and optimizing their loyalty programs for mobile phones first and foremost, since even a slight delay in responsiveness can reduce the sales. The apps as well as programs should be simple, so the customer doesn't have a hard time understanding them, and a good solution to that could be an explainer page.

As more and more companies start adding loyalty programs, staying competitive becomes a significant problem. One of the solutions is to add more rewards and perks that are unique and differentiate themselves from brands in similar sectors. Different promotions also help, especially when used with previously mentioned multichannel and omnichannel programs, which also helps to build the reputation and name of the brand.

Since customer experience is becoming the focus of brands, experiential marketing is gaining more traction with the goal to make the customer feel more emotionally connected and valued after going to an experiential marketing happening. The newer generations value the experience that a brand provides more than the older ones, making the brands leave behind product marketing over experiential marketing.

The importance of social media shouldn't be neglected. The brand engagement that the social media offer can be witnessed by the polarization and popularity of different political movements like #grabyourwallet and#MeToo, as they have changed the brand management and loyalty dramatically. Companies looking to enhance the perception of their brands must utilize the options digital technology and social networks have to offer. On the other hand, broad marketing strategies employed by companies now leave behind the increasingly important individual experience, and as such, the brands should start investing in getting to know their customers better, individually, and through social media. Since users leave personal data on many platforms, from Youtube to Facebook, a customer profile could easily be made and used in advertising.

Companies and organizations, when researching customer relations focus on the analysis of huge datasets and big data in order to find the best Return On Investment (ROI). Since that amount of information is impossible for a human to retain, companies have started using machines and machine learning to gather that can be used for predicting customer behavior, detect patterns and find predictable responses that will help companies in increasing customer's spend and engagement.

KEY EXAMPLES

Amazon Prime is proven to be a very successful loyalty program, so we think an analysis of their strategies could give us some important insights. A study was done on about 1600 Amazon customers, with 65% of them having Amazon Prime membership. The results show that:
85% of Prime members visit Amazon weekly
— more than 45% of members buy something at least once a week
— Amazon has more browsed products, offers and deals than their competitors
— Many customers use Amazon for the comparison of prices

Amazon makes one-to-one based propositions and offers, and it does it by using personalized data, a strategy even the offline retailers should use in their businesses. Mass marketing is losing traction, while the data-driven and personalized is gaining it. One of the ways to collect customer data is to track them through tokenising customer's payment card, which gives companies a glimpse into the customer's behavior.

Conclusion

We have found the trends, and provided you with some examples, and we hope that you are content with the response.
Sources
Sources

From Part 02