Nepal Bans Alipay and WeChat Pay
COVID-19 and China
A Nepal market. Photo: Credit to Unsplash website

Nepal Rastra Bank (NRB), the country’s central bank, announced a ban on May 21 for the use of Alipay (支付宝) and Wechat Pay(微信支付) in the country. The bank reasoned that these apps have already caused a huge loss of tourism income for Nepal.

Alipay and Wechat Pay are two major mobile payment tools in China. They provide online and offline payment services for the convenience of both customers and merchants. A simple scan of a merchant's QR code and payment confirmation by a customer will complete the transaction.

However, with convenience also comes trouble. By allowing transactions through Alipay or Wechat Pay apps, some of the Chinese vendors who run businesses in Nepal will provide a Chinese QR code for customers to scan. In this way, money paid by tourists will go directly to the merchants’ Yuan-denominated accounts opened on China’s mainland. As a result, the money bypasses the Nepali financial system,sidestepping registration required of foreign income and evading taxation.

Tourism is one of the largest industries in Nepal as it aims to attract two million visitors by 2020. Chinese tourists make up a sizable portion (15%) of the visitors. In 2018, the number of Chinese tourists traveling to Nepal reached 153,602, an increase of 46.8% from the same period of 2017.

Ant Financial, owner and operator of Alipay, responded officially to encourage its users to comply with local laws following the ban. For users of the QR code outside China, Alipay has stepped up its efforts to monitor overseas transactions – with some effect already. The company has also said it will take legal action against those found guilty of abusing the services. WeChat Pay also responded that it will employ technical means to severely crack down on and guard against overseas illegal collection of funds. Meanwhile, Nepali authorities have yet to ask telecom companies to block these two payment services.

Although Chinese payment companies possess advanced technologies and rich experience, they also need to adapt to foreign supervision standards and bring their practices in line with payment regulations when going global. They cannot simply copy domestic experience and apply it to overseas markets.

The issues Alipay and WeChat Pay encountered are inevitable when companies are on their way/on track to pursuing their overseas businesses. However, with the Belt and Road Initiative and the surge in overseas consumption by Chinese people in recent years, more and more Chinese companies like Alibaba and WeChat Pay’s parent Tencent have accelerated their expansion into the international market. Therefore, it would be crucial for them to reduce negative publicity to a minimum scale.

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