An Ottawa fintech firm has brought China’s two biggest payment platforms to more than a thousand Canadian merchants after just a year in business, with plans to expand to the U.S. next month.
Motion Pay allows merchants to accept payments in-store and online through Alipay and WeChat Pay, the two platforms dominating the mobile payments market in China. More than 1,000 businesses around Canada – including local clients such as the Westin Hotel and numerous retailers in the city – have Motion Pay’s custom point-of-sale devices, which can process transactions in Chinese currency through QR code-based payment systems. The firm has processed C$25 million worth of transactions in the past year.
Co-founder and CEO Riven Zhang tells Techopia that the opportunity for Motion Pay has come from the explosion in popularity of QR code-based payments in China. For the longest time, he says, cash was the default for transactions large and small in the country.
“Before 2016, everybody carried a lot of cash. I mean, loads of cash, like ten thousand dollars in the pocket. Unbelievable!” he says.
But when he returned home to the country for a visit in late 2016, he was shocked by the prevalence of QR codes. Even the small breakfast joints on the street corner were accepting payments this way, he says.
The popularity is easy to understand. WeChat Pay was born of Tencent’s WeChat, an already massively popular Chinese messaging platform; Alipay came from the Amazon-esque Alibaba, which runs a marketplace where many residents make regular purchases.
These companies are not just playing with pocket change: China’s mobile payment market is estimated to be worth up to US$5.5 trillion, and together they hold roughly 90 per cent of that market share.
So when Zhang set out to bring this payment method back in Canada, he went right to the source. He managed to set up meetings with the creators of both Alipay and WeChat Pay, and by the end of 2016 – without a shred of functional technology – Zhang had signed deals to bring the two biggest payment platforms in China to Canada.
Never hurts to ask
According to Statistics Canada, roughly 650,000 Chinese tourists visited Canada in 2017. Add to that the more-than-130,000 Chinese students attending Canadian universities – China is the largest sending market for Canadian education, according to ICEF Monitor – who are each staying four or more years, and that’s a sizeable market that retailers don’t want to miss.
There’s also the matter of recent restrictions from the Chinese government itself. At the end of last year, China put a US$15,000 annual overseas withdrawal limit on its citizens travelling abroad. Additionally, Chinese nationals are limited to purchasing approximately US$50,000 worth of foreign currency each year.
Motion Pay’s system, which lets users pay directly in Chinese yuan, effectively skirts this issue.
When Zhang got back to Ottawa, jeweler Birks was the firm’s first client. He says he walked into the store’s Rideau Centre location in early 2017 and asked if they’d be interested in using the firm’s product to process transactions for Chinese visitors.
“It’s not just a product. It’s basically a marketing tool to attract more Chinese customers,” Zhang says.
That pitch got Zhang a meeting in Montreal with one of the firm’s vice-presidents. He still didn’t have a prototype yet, so during his first sales pitch, he was drawing on whiteboards to explain the concept.
On Feb. 23, 2017, in the Birks’ Rideau Centre shop, Zhang made the first-ever purchase with a Chinese payment platform in Canada.
Staying in motion
Motion Pay did a press release after the Birks purchase, and Zhang says the phone calls “started to just fly in.” Major brands such as Hugo Boss, Dior and Ecco Shoes have since joined.
It helps that the system has a security edge over traditional card payment systems. The QR codes on WeChat Pay and Alipay are scrambled every minute, so even if someone got a screengrab of one of your codes, it’d be useless a few seconds later. Passwords are also required for larger purchases, but aside from that, the system is as secure as your smartphone.
Zhang says the QR code technology “leapfrogged” credit cards in China, where tap-based payments haven’t really caught on.
“This is much, much better than credit cards,” he says.
Motion Pay is headquartered in Ottawa – its offices are on Hunt Club road in the same complex as the T&T Asian supermarket – and it has sales teams in Vancouver and Toronto. Zhang says he’s gotten calls about bringing the technology to Middle Eastern countries as well, but the firm “doesn’t have the manpower” at the moment to tackle that market.
By the end of March, however, Zhang expects Motion Pay will launch south of the border. Most of the preparation has been clearing the expansion with U.S. banks, but the due diligence process is wrapping up soon, he says. The fintech firm is now looking to raise money to build up its marketing budget.
After that, it’s all about keeping the substantial momentum of Motion Pay’s first year, well, in motion.