Overseas e-wallet tax refund service set to stimulate tourist spending

Experts believe that Alipay+'s introduction of the country's first overseas e-wallet tax refund service will further enhance the mainland's tax refund system, stimulate spending by overseas tourists and drive the global expansion of payment platforms.

Ant Group's global wallet platform Alipay+ announced on Monday to include tax refund service of Shenzhen stores on AlipayHK. It will also expand services this year to include its other overseas e-wallets, such as KakaoPay in South Korea and GCash in the Philippines, with plans to eventually cover all Alipay+ partner wallets, benefiting tens of millions of visitors to China.

From Monday, Hong Kong shoppers who have made purchases at any of the more than 1,500 tax refund stores in Shenzhen can present their tax refund forms at the city's centralized refund points or six boundary-crossing refund counters to complete either instant refunds or standard departure refunds.

Refunds will be issued in Hong Kong dollars and deposited directly into users' AlipayHK accounts. They can be used for consumption, payment and public transportation in Hong Kong.

Hong Kong residents had previously relied mainly on credit cards or cash for tax refunds while going on trips. This often involved complex processes, long fund transfer cycles and losses from currency exchange.

AlipayHK's tax refund service in Shenzhen works with Guangdong Huaxing Bank — a departure tax refund agency — with the support of the Shenzhen Tax Service and the Shenzhen branch of the People's Bank of China.

In addition, from Monday until Sept 26, AlipayHK users can enjoy discounts on their first 10 purchases on the mainland. They can also receive discounts of up to 1,988 yuan ($279) at popular shopping malls and merchants there.

According to AlipayHK, over 2 million Hong Kong residents made purchases on the mainland using the e-wallet last year.

Shenzhen is accelerating its development as a benchmark city for tax refunds. Currently, the city has over 1,500 tax refund stores, with the highest number and variety of tax refund ports in the country. It also leads the nation in the scale of centralized refund points.

Yu Lingqu, deputy director of the department of finance industries at the China Development Institute, said that such an efficient tax refund method also motivates tourists to use their refunds for additional spending, which may further increase overall consumption by overseas visitors.

While there are many cross-border payment methods, specific types of consumption, like tax refunds and cross-border e-commerce, still face issues like complicated verification and long processing times.

The latest move by Alipay+makes travelers more inclined to choose platforms that offer convenient departure tax refund services. It is also a powerful means for the platform to expand payment scenarios, increase market share and explore international markets, he said.

Yu said he believes departure tax refund services could become a key growth driver for these payment platforms, helping them to connect with merchants, showcase products, launch promotions and build a global tax refund network.

In the long run, he said the cost-effective consumption environment can be a key factor for cities on the Chinese mainland to develop tourism and businesses, as well as attract overseas investment.

He noted that the Chinese mainland's emerging technology products, such as electric vehicles and drones, are highly attractive to overseas consumers. Their spending not only revitalizes the domestic consumption market, but also gives companies greater motivation to internationalize and upgrade.

Yu also suggested launching a comprehensive platform to showcase and sell the country's latest innovative products, equipped with convenient payment options.

Song Ding, director of the Research Institute of the China Urban Experts Network, noted that upgrading of the Chinese mainland's manufacturing industry and consumer environment has driven spending by overseas tourists. Song said that this new measure will further promote domestic consumption and contribute to the wider opening-up of the mainland market.

Timothy Chui Ting-pong, executive director of the Hong Kong Tourism Association, said the efficient digital service offered by Alipay+ is a significant advancement in the global tax refund system.