Why hasn't WeChat Pay caught on in Taiwan?

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The contrast between WeChat's dominance in mainland China and low profile elsewhere is striking. Of all the markets where WeChat could be a success, Taiwan - with its many cultural similarities to the Chinese mainland - is perhaps the most obvious. Mainland Chinese costume dramas, known for their high production value, are a staple of Taiwanese television. Among smartphone brands, after Apple and Samsung, Oppo, Xiaomi and Huawei are among the most popular with Taiwanese consumers. In e-commerce, Taobao has carved out a strong niche for itself with young Taiwanese, especially women.

Yet in messaging apps, WeChat has a light footprint compared to Japan's Line and Facebook Messenger. Line's active users in Taiwan nearly equal the island's population of 23 million. WeChat has about 6 million. Since most Taiwanese don't have their WeChat on their handsets, they do not use its digital wallet. The exception would be those Taiwanese who frequently travel to the mainland for business or are based there.

Merchants in Taiwan increasingly accept WeChat Pay, but they are catering to the needs of tourists from the mainland. Department stores, freestanding luxury retailers, restaurants and other shops frequented by mainland visitors accept WeChat Pay and Alipay for payments.

To be sure, concerns about data privacy have hampered WeChat's development in Taiwan. Among Taiwanese, there is uncertainty about the security of user data on the platform, more so than on Line, Facebook Messenger or other apps.

However, that is not the main reason WeChat Pay has a low user adoption rate in Taiwan. Rather, the WeChat platform is tailored for mainland Chinese users. Localization for other markets has been very limited. Given the popularity of Line and Facebook among Taiwanese, WeChat cannot rest on its laurels if expects to compete with them.

Further, since early 2019, a Chinese bank account has been required to accept money into a WeChat wallet. For most Taiwanese - and indeed, consumers anywhere but mainland China - that's a non-starter.

Until that policy is amended - if it is amended - it will not be easy for people based outside of mainland China to use WeChat Pay. In contrast, Line Pay, while based in Japan, has never required that users have a Japanese bank account tied to their digital Line wallet. In Taiwan, a Taiwanese bank account tied to a Line Pay digital wallet suffices.

WeChat's experience in Taiwan should be cautionary. The company could surely thrive in its large home market alone, but it has expressed global ambitions. Data privacy will be a concern in many markets - it's an issue WeChat must address. At the same time, the company must develop localized versions of its platform compatible with non-Chinese bank accounts.

Without a more proactive international strategy, WeChat Pay will struggle to attract users outside of its core mainland Chinese base.