There have been several payment collaborations announced in recent weeks involving U.S. and Chinese companies, betting on a recovery in travel following China's near-total shutdown during the pandemic. But the country may not be opening up as much as some would hope.
Signs of progress include tuition fintech Flywire's deeper connection to Tencent, as well as WeChat and Alipay's increased support for Visa and Mastercard. The deals are designed to make payments easier to execute for different types of travel; Flywire is focused on outbound student travel and Visa and Mastercard on travel to China.
But all of these initiatives face political uncertainty amid a travel recovery between the U.S. and China that has lagged other corridors. Still, the U.S. participants in these partnerships expressed optimism.
"I just returned from China and saw this first hand. It's like paying like a local resident," said Michael Mieback, Mastercard's CEO, during the card nework's recent
Mastercard views China as part of a broader growth in cross-border payments. "There's a notable opportunity in and out of China," said Sachin Mehra, Mastercard's CFO, during Mastercard's earnings call. Visa is also looking to take advantage of growth in cross-border travel, contending
Enabling "native payment app" tuition payments is part of Flywire's strategy. The firm recently partnered with Tencent Financial Technology to directly offer WeChat Pay as an option for Chinese students and families making education payments abroad. It's a partnership designed for Chinese students attending universities in the U.S. and other countries, an opportunity Flywire is anticipating will increase as the impacts of the pandemic fade.
China is a huge market but a challenging one. There were more than 290,000 Chinese students enrolled in U.S. colleges and universities in 2022, by far the largest number among non-U.S. countries; India was second at 199,000, followed by South Korea with 40,000 and Canada with 27,000 according to
China's overall outbound mobility growth has been relatively slow, at about 66% of its 2019 highs, according to the
Flywire said China is still a priority, given its size and the enduring popularity of American universities for Chinese students.
"There's going to be ebbs and flows with China, but it's always going to be a big market for us," said Mohit Kansal, senior vice president of global payments and payer services at Flywire. "There were challenges during the pandemic but we're in this market for the long haul."
Flywire supported WeChat Pay previously, but has added a direct connection to Tencent to reduce the need for third parties to handle parts of processing, and to shorten the window for foreign exchange to reduce volatility.
"The payers don't have to go through intermediaries, so it's a lot more seamless than it has been in the past," Kansal said. "The payments can be as 'local' as possible. The students are used to their local way of paying."
U.S. payment companies still have a hard time establishing a local presence in China, creating a reliance on partnerships. For many years,
These efforts have been rebuffed, generally over shifting Chinese rules for how the card brands will manage data within China. China has at times made overtures to outside payment companies. In 2015, the Chinese government said it would
There was also some movement from China in 2020 as part of
And general political tensions between the U.S. and China are higher than in recent years, given a
"China is not opening up in any meaningful way," said Eric Grover, a principal at Intrepid Ventures. "However, recognizing that very few foreigners have or have reason to have a China UnionPay card or Alipay or WechatPay account, China has never had a problem permitting foreigners to use foreign payment networks to make payments."