Cruise lines operating in Southeast Asia are increasingly integrating apps like WeChat and Alipay into their on-board payment models. World Cruise Industry Review talks to Simon Ho, vice president of guest commerce & experience at Dream Cruises, about why so many cruise lines are moving towards a mobile-first payment infrastructure and whether it’s a sign of things to come.
China is fast becoming a cashless society. Over the last few years, its traditional banking system has been disrupted by mobile apps like Alipay and WeChat, which allow people to pay for nearly all their day-to-day expenses by scanning a code on their phones.
Although similar digital platforms (e.g. Apple Pay) are making waves elsewhere, in China they’re all but ubiquitous. The USA’s burgeoning mobile payment sector is around 90 times smaller than China’s, where it currently stands at $5.5 trillion. Over eight million bricks-and-mortar shops now accept Alipay, a service with 520 million users worldwide.
Unsurprisingly, a number of cruise lines operating in Southeast Asia are taking note. Several operators have begun to integrate these apps into their payment models, with a view to bringing the guest experience closer to how they live their lives onshore.
“One of the key pain points for guests traveling internationally is the access to funds,” says Simon Ho, vice president of guest commerce & experience at Dream Cruises. “By partnering with Alipay, we bring a mobile payment solution that our guests, particularly mainland Chinese, are already very comfortable using.”
Increasing popularity at sea
Genting Cruise Line, Dream Cruises’ parent company, first partnered with Alipay in 2015. That year, Star Cruises, another Genting brand, became the first line to accept Alipay spot payments onboard.
More recently, the company extended this partnership to its new luxury brand, Dream, beginning with Genting Dream in September and moving on to World Dream in November.
“We have launched the full suite of mobile payment options at sea, allowing guests the options of spot payment, self-checkout and auto-debit with Alipay,” explains Ho. “They can also use AlipayHK, the newly launched Hong Kong version of Alipay which supports transactions in HKD for Hong Kong.”
Another ship to welcome Alipay is Norwegian Joy. A Norwegian Cruise Lines’ vessel, the first to be stationed in China, it is styled with the Chinese market in mind and claims to offer a ‘fully immersive Chinese cruise holiday’.
Shortly before the ship’s maiden voyage in June 2017, the company announced it would partner with Alibaba group, the commerce company behind Alipay, in order to glean insights into the Chinese consumer base. The payment solution was later debuted on a special preview cruise, before being rolled out to all guests.
“When designing Norwegian Joy, our goal was to construct a ship that would deliver a First Class at Sea experience while making Chinese guests still feel at home,” said David Herrera, president of NCLH China, at the time. “Providing the Alipay payment solution to our guests allows [them] to make purchases with the most-used payment system in China in the same way that they use it on land.”
Meanwhile, Costa Cruises, which has four ships based in Asia, has announced a collaboration with WeChat, a social platform dubbed China’s ‘app for everything’ owing to its wide range of functionalities. After initiating a series of ‘Mini Programs’ last August, the ships now offer a ‘one stop digital solution’ with WeChat, enabling payments across many different scenarios.
While there are other examples (not least SkySea Cruises and Princess Cruises, both of which use Alipay), the most definitive embrace of payment apps comes from MSC Cruises, the world’s largest privately owned cruise line. Having already launched Alipay on MSC Lirica, which serves the Chinese homeport market, the company recently announced it would roll out Alipay across its fleet worldwide. The service will be extended to all 14 ships by March 2018.
This decision, a world first, could be read one of two ways: either MSC is expecting to see a greater usage of Alipay internationally, or it is hoping to attract more outbound Chinese cruisers. Forecasts suggest that by 2030, there will be between seven and 10 million outbound Chinese passengers, putting China on course to overtake the US in terms of market size.
MSC Cruises CEO Gianni Onorato said in a statement: “Chinese guests will be an important driver of the cruise industry and are highly valued by MSC Cruises… Introducing Alipay to MSC Cruises’ entire fleet as a payment option is a testament to our long-term commitment to Chinese guests and market.”
So what does this shift in the payments model mean for cruise ships in China? And might MSC Cruises’ recent announcement set the tone for what’s to come?
Offering a better service
If cruise ships are going to continue to attract passengers, Ho believes they need to take their cues from what’s happening on land.
“Cruise ships must keep pace with the broader payments ecosystem on shore. This means keeping up with all the latest developments in payment methods and even cryptocurrencies,” he says.
We are already hearing talk of the ways that blockchain-powered platforms could change the travel industry. And in January 2018, despite fears the Bitcoin bubble was bursting, 600 cryptocurrency enthusiasts set sail from Singapore on a Blockchain cruise.
With regard payment apps, the scramble to deploy the infrastructure reflects a strong desire for relevance. Over the last few years, the Chinese cruise industry has grown dramatically, climbing 70% year-on-year between 2013 and 2016, according to Goldman Sachs. We have seen a rush of ships deployed to China, alongside a number of purpose-built ships for the Chinese market, and entirely new cruise lines like Dream.
However, it seems that passenger numbers are now falling, with most operators in this market cutting capacity. Around 2.4 million Chinese passengers are expected to take a cruise this year, compared to 2.8 million in 2017.
While longer-term forecasts are more optimistic (China’s Ministry of Transport expects to see 4.5 million cruisers in 2020), the short-term market outlook is undeniably concerning. The existing ships, then, are under pressure – how can they adapt to Chinese preferences and steal a march on the competition?
According to Ho, the likes of Alipay are just another convenience afforded to the guests.
“World Dream, our ship currently serving the Pearl River Delta market, has predominantly mainland Chinese guests,” he says. “From a payments technology standpoint, these guests entirely leapfrogged credit cards and went straight to mobile first payments.”
Such passengers, he says, love the service. Some are opting for a ‘card binding’ approach in which on-board expenses are charged to their Alipay account automatically, with the balance settled on a nightly basis. Others are using a ‘pay now’ model, in which they can settle the bill anywhere in the ship, any time.
“It’s an inconvenience that we’ve removed so they can focus on what’s most important – quality time with their loved ones on a remarkable cruise vacation,” he remarks.
Some commentators believe there may be a shadow side to payment apps. China recently tightened the regulations in this area, imposing a series of curbs that will hurt payment companies’ future expansion. What’s more, the debate surrounding data collection and privacy is beginning to ramp up.
As a recent Wired article pointed out, Ant Financial (part of Alibaba) has developed a platform called Zhima Credit, which, if a person opts in, uses their Alipay data to determine a credit score. Although Ant Financial has said the platform is “independent of any government-initiated social credit system”, it has elsewhere stated it is looking “to help build a social integrity system”. Through collaborating with various corporations, which reward people with good credit scores, it may contribute to what the Wired article calls a ‘vast new experiment in social ranking’.
Of course, since cruise lines endeavor only to follow their customers’ preferences, they will arguably have little stake in this debate. All Ho will say on this count is that the app itself is not linked to credit rating services.
What does seem clear is that payment apps, despite the challenges ahead, are beginning to spread overseas. Alipay is already beginning to make inroads in the US, with a view to extending payment services to the four million Chinese nationals who visit the States every year. Its parent company has also inked deals in a number of Asian countries, where digital banking is just getting off the ground.
Whether or not the service will gain traction with Western cruisers, it will likely prove imperative for attracting the Chinese. Let’s say you’re a Chinese tourist, looking to book a Mediterranean cruise. You will surely be more inclined to pick a cruise line that lets you pay as you do at home.
From the cruise industry’s perspective, this means gaining a foothold in what is still a largely untapped market. Just 0.2% of the Chinese population have cruised, compared to 3.5% in the US.
Commenting on MSC’s global Alipay rollout, Su Qiang, vice president of Ant Financial, said: “We hope that Alipay, carried by MSC Cruises ships, will better serve Chinese tourists on their global cruises while allowing foreign tourists to experience Alipay that is secure, efficient and convenient. This is the mission and vision of Alipay expanding overseas.”
This article appears in the 2018 vol 1 edition of World Cruise Industry Review