Mega payment apps Alipay and WeChat pay have been gaining traction in the U.S. market through availability at thousands of merchants. COVID-19 plus trade tensions and politics have put an abrupt end to the stream of travelers from China to the U.S. who would use these acceptance locations with their homegrown mobile apps while on vacations, business trips and traveling to the states for academic reasons.

“The Asia Mobile Pays had gained a foothold in the U.S. in-store payments market, until their key target market—Chinese visitors to the U.S.—collapsed. Now that U.S. merchants have seen the cost benefits and purchase transaction simplicity of Alipay and WeChat Pay, they will be looking for the payments industry to bring similar ways to pay to their stores”, comments Ray Pucci, Director, Merchant Services Advisory Service at Mercator Advisory Group and co-author of the report.

These mobile payment services are available only to Chinese nationals and are not a direct challenge to U.S. card networks and issuers, but the similar use of QR code based mobile payments, integrated within a retail app, is beginning to emerge through pilot programs, giving a glimpse of what may come.

“With very low processing costs, quick receipt of deposits and no chargebacks, this payment solution has a lot of appeal to merchants, particularly smaller merchants. Card is still king in many economies and toppling rewards and consumer protections will be a tall order, but apps influenced by the successful Chinese brands will pull some transactions away from traditional payment types,” comments Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group and co-author of the report.

This report is 14 pages long and has 4 exhibits.

Companies and other organizations mentioned in this report include: Alibaba, Ant Group, Apple, China Union Pay, CVS, Facebook, Incomm, Kroger, Mastercard, PayPal, Rite Aid, Target, Tencent, Venmo, Visa, Walmart.