If you ever felt frustrated because a store or a restaurant didn’t accept cards, but you couldn’t find an ATM, you’re not alone.
People in China, however, might not relate.
In China, you’ll have a bigger problem if you want to pay with cash.
Interestingly enough, the alternative to paying with cash in China are mobile payments rather than cards.
China’s mobile payment apps, WeChat Pay and Alipay, are utilized by just about everyone.
This includes luxury brands, high-end restaurants, takeaways, beauty parlors, and even street vendors and taxi drivers.
With a record $12.8 trillion in mobile payment transactions from January to October 2017, China’s mobile payments outpace the $49.3 billion spent over mobile transactions by US consumers.
In other words, while the population of China is about 4 times the size of US population, their mobile payment spend is more than 200,000 times (!) higher.
How can we implement this strategy in the western business world, and how can this impact the success of restaurants?
Why are mobile payments so popular in China?
Paying with a smartphone is a primary payment method of 92% of people in China’s top cities.
You read that right: almost everyone in urban areas would rather pay with their phone than anything else.
So before we get to why that’s the case, let’s look at the numbers behind the facilitators of mobile payments in China:
- Alipay: owned by Alibaba Group and counts over 500 million users
- WeChat Pay: facilitated through WeChat (counting over a billion users) and used by 800 million people
Alipay came to life as a payment solution for Alibaba’s consumer-to-consumer ecommerce platform, Taobao, in 2004.
Since then, Taobao evolved into one of the top ten most popular websites in the world, and Alipay evolved into a mobile wallet.
WeChat is an app that connects people, services, and businesses in China and around the world, making it easy for companies of all sizes to promote their offers and communicate with their (potential) customers.
Since WeChat is used by around 1/7 of the entire world’s population, you can imagine how adding a payment feature to an already impactful and widely used app makes paying with your phone easy.
In other words, paying with an app most people already have simply became more convenient than carrying cash.
Add to this the difficulty of dealing with state-owned banks and the lack of popularity of credit cards, residents of China quickly and easily resided to mobile payments.
Estimates state that 60% of Chinese people own a smartphone, which means there’s a vast market of potential users of these payment solutions.
With that in mind, mobile payments became a more user-friendly option than signing up for a credit card. Therefore, the Chinese have adopted this approach as an easy, pragmatic way to pay for anything, anywhere.
Restaurant mobile payments in real life
We’re all about making purchasing frictionless, instant, and fun.
So we decided to dig deeper into some of the scenarios where mobile payments make life easier when it comes to eating and drinking out, both for venue owners and guests.
Ordering and paying from the table
When go to a restaurant with a group of friends, how many things can go wrong?
You receive the wrong order.
Your order costs more than you thought it would.
And my least favorite, awkwardly trying to figure out who will pay the whole bill (and everyone else pays that person). This is even worse if you’re like me and rarely carry cash.
Chinese restaurants have tackled all of these and more by facilitating food ordering directly from the table.
By doing that, they can provide rich menu options, get everyone to pay for themselves and choose in their own time.
As well as reduce the staff time needed to take orders.
And while there are some restaurants or cafes that do this in the west, it usually requires the guest to download a specific app, often restaurant-specific, and then go through the ordering and paying process.
To the contrary, Chinese restaurants are leveraging widely used WeChat’s digital wallet.
Once the guest scans the QR code on their table, WeChat app opens a menu and allows them to customize their order and pay for it straight away, while sending the order to the restaurant staff.
No extra steps, no digging for cash or a credit card, and no pressure on perfectly memorizing the menu item you liked.
Ordering and paying anywhere
If you’ve ever wanted to promote your restaurant through a pop-up stand at a food market, you know the difficulty in setting up the logistics for it.
Setting up payments is among the bigger hurdles.
If you accept cash, you need to make sure you have enough change at all times and that you don’t accidentally accept counterfeit money.
And of course that, at the end of the day, your cash is safe and secure.
If you accept cards, it can turn into a tech nightmare.
In China, you can literally pay any street vendor (and even panhandlers) by using mobile payments. There’s no doubt this makes it easy to start a street food business or expand your restaurant by taking it mobile.
In the case of Chinese street food parlors, there is no complex paperwork, tech nightmares, or days of preparation just to be able to receive money.
All they need is a QR code that lets a customer pay for their food using the app they prefer.
It’s this level of convenience, for both the customer and restaurateurs, that’s missing from the western world.
But making this convenient for all involved isn’t the primary benefit of including mobile payments within your restaurant…
Mobile payment users tend to spend more
We’ve already discussed some numbers around the usage of mobile payments in China.
The benefits of going digital and mobile with a restaurant business isn’t just that it’s easier and quicker to process payments and get the food to the customer.
The same 2017 study by Penguin Intelligence revealed that the amount spent per month using mobile payments keeps going up. At the same time, Chinese spending using cash is down around 10% over the last two years.
Not only is it more efficient and streamlined to enable paying with smartphones — it’s also likely more profitable in the long run!
In his report for the Business Insider, Harrison Jacobs wrote that in his conversations with young Chinese people, he uncovered that they rarely ever carry a wallet or cash:
“There was no point. Smartphones were the easiest way to pay for things, so why bother?”
Making purchasing convenient and attracting more spending than you would with cash? Sign me up.
Why expanding brick-and-mortar into online commerce works
If you still find this mobile payments conversation a thing of an entirely different country and culture, here’s another thing:
Taking your physical business into the online world makes it accessible and findable. Reducing friction in ordering food or purchasing product is an overarching and crucial benefit of it, but here are a few more for you to consider.
Provide comparison shopping
If you had to choose between a few restaurant options, but only one of them had a website and an option to be contacted through social media, what’s the chance you’d choose one that isn’t online at all?
Very slim, right?
By existing online even when you’re a brick-and-mortar business only, you increase your chances to be the top choice for people comparing their options.
Enable deals and coupons
The more present you are and the more sophisticated you become with your online marketing and tracking, the more specific you can get when offering discounts and other perks based on previous online behaviors and even meal choices.
Moving the majority of the consumer journey to a digital medium is going to make identifying your best customers and driving repeat sales so much easier.
And when it’s at least 4X easier to sell to an existing customer (at a fraction of the cost) identifying your best diners is of utmost importance.
Amplify every marketing channel you have
Imagine this scenario. You have the best deal for driving new restaurant guests. You want to make sure that you can measure its promotion on social media, so to avail of the offer, your guests have to follow your social media profile, like and comment a certain post, and show it to you in the restaurant to redeem the offer.
At the end of the day, you can easily add up the numbers to analyze the success of this social media promotion.
But you also have to spend a lot of time to check it every time someone wants to redeem it, and it creates an inconvenience for the guest.
What if they could initiate ordering their food directly from your social account and take advantage of the offer that way? It would save time for everyone and provide a great experience of eating out.
How to make smartphones work in your favor
In China, mobile payments have taken off and as a result, every industry that relies on quick and easy payments now has the structure to make more money.
We already know that the west has a habit of following China in terms of social media:
That isn’t a bad thing by default—even though it’s often portrayed as only that. It just means we now have an extension of ourselves that we, among other purposes, want to use to make our lives easier.
The ease and convenience of going about our day can now happen thanks to the technology at our fingertips.
And even though we can’t replicate the Chinese mobile payments success just yet, there are steps businesses can take to provide a streamlined experience for their consumers.
Thanks to our Square integration, restaurants can now import their menus, locations, take payments, and send order updates by making the most out of a Facebook Messenger experience.
If you feel like making your ordering experience more convenient and automate many of the tasks that come with it, get your free jumper account to try it for yourself.