Retail in China looks completely different from any retail we know here in North America. Mobile payments accounting for four out of every five transactions thanks to innovative applications WeChat. This app is so ingrained in Chinese culture, nearly 90% of citizens use it, and many young people have never used cash in their lifetimes. This provides a massive opportunity for companies to participate in the Chinese market, whether it be here in Canada, or internationally via eCommerce. Today’s guest is Martin McCann, Chief Growth Officer at OTT PAY. We have an interesting conversation about how important WeChat is to the Chinese community, and how OTT PAY enables Canadian retailers to seamlessly integrate into WeChat and unlock the vast potential of Chinese consumers in Canada and beyond.
Welcome to the The Voice of Retail , I’m your host Michael LeBlanc, and this podcast is brought to you in conjunction with Retail Council of Canada
Retail in China looks completely different from any retail we know here in North America. Mobile payments accounting for four out of every five transactions thanks to innovative applications WeChat. This app is so ingrained in Chinese culture, nearly 90% of citizens use it, and many young people have never used cash in their lifetimes.
This provides a massive opportunity for companies to participate in the Chinese market, whether it be here in Canada, or internationally via eCommerce.
Today’s guest is Martin McCann, Chief Growth Officer at OTT PAY. We have an interesting conversation about how important WeChat is to the Chinese community, and how OTT PAY enables Canadian retailers to seamlessly integrate into WeChat and unlock the vast potential of Chinese consumers in Canada and beyond. You can reach Martin at martin.mccann@ott.ca
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I’m your host Michael LeBlanc, President of M.E. LeBlanc & Company, and if you’re looking for more content, or want to chat follow me on LinkedIn, or visit my website meleblanc.co!
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Michael LeBlanc
Martin, welcome to The Voice of Retail podcast. How you doing this afternoon?
Martin McCann
I'm doing great. I appreciate the opportunity to be here with you, Michael.
Michael LeBlanc
I've always really been interested slash fascinated in payments. And it sounds like a fun thing to be fascinated about. But it's really trying to understand this new payment way that merchants can engage with whole new audiences in a whole new way. So listen, I'm excited to jump in. So, let why don't we start the beginning. Tell us about yourself. Who are you? your background, and what you do at OTT Pay?
Martin McCann
Sure, great question. Who am I? You could categorize me as a career payments person. I've been very fortunate to see the advancement of payments over the last 30 years or so. And I'm dating myself a little bit there. I've worked for processors. I worked for processes before there were processes and there are banks. I ‘ve worked for payment brands. I've worked for software companies, hardware manufacturers. I've worked for startups. I've worked for Fortune 500 companies. I've also been very fortunate enough to work in the Canadian market, but also the US market as part of the re (inaudible) conversion. And I've managed sales teams across the globe. So, I've been again, very lucky that I’ve been able to take payments from a from a global perspective.
Michael LeBlanc
It really is a bit of a specialty, right? Because behind the scenes, it's one of those, in my mind, it's one those technology that, you know, you tap your card and magic happens and money changes hands. But there's a lot that goes on behind the scenes, right? So, you really need years, I would suspect, in the, in the space to understand and be able to articulate and explaine it all, right?
Martin McCann
Yeah, that's a great point. For a lot of people, you know, my parents will ask me, what do you do? Cause we you know when you put your credit card in that machine. And then they’ll say “yes”, to them. Then I pick it up and I run with it from there. I've been able to see the evolution of payments, right. We had the knuckle busters. Where you used to imprint on to a sales draft. To the introduction of authorization, draft capture. Even part of the pilot of the launch of interact. And the movement of mag stripe to (inaudible). Google and Apple Pay. The explosion of tap in pre COVID. And I'm now really looking forward to the impacts of things like real time payments. The impact that further insertion of a lot of these new disruptive technologies are going to do to the to the payment space.
Michael LeBlanc
It's a really great opportunity to explain kind of how the rails work and how this works, because it's particularly interesting.
So why don't we Why don't we talk about who is OTT Pay and who is the company? Give us a sense of the genesis of them and their scale and scope and, and all that great stuff.
Martin McCann
Absolutely. So OTT Pay, and for those that are interested in OTT, actually stand for 1-2-3, we want our products and services to be as easy as, as 1-2-3. But we're a Canadian company, we're based in Toronto. We were the lead in bringing Chinese digital payments into Canada.
We were sort of five years old now with our parent company, OTT Financial, being just over about 14 years old now. We've got about 100 employees across the country. We actually purchased the old Wrigley Factory down on Wellsley Street in Toronto. So, we've got a great view of Sunnybrook Park. And we've converted that into our Canadian head office.
The best way to describe OTT Pay, so we're processor, which is a term that most retailers would obviously know. Processor electronic transactions at face value. But we're more than that. So obviously, we do Visa and MasterCard and interact. Today will be referred to as traditional western payments. But we have two other core competencies that we have. One of them is based in QR, QR Code based technology, the quick response. And then the other core competency we have is marketing and selling to the Chinese consumer, both in Canada, or in Canada, China and around the world.
The value add, or what we think makes us different than your typical processor is, we enable merchants to integrate Chinese mobile payments through QR based technology into their existing platform payment offering. And we offer both ecommerce and marketing service that are specifically catered towards the Chinese community both in Canada and around the world. So, to summarize it, I'd say that, you know, we work with retailers of all kinds in brick and mortar all shapes and sizes and ecom. And integrate Chinese mobile payments, like WeChat Pay, Alipay, China UnionPay, into what their existing offering is today.
Michael LeBlanc
Well, that's a good segue into my next question. Let's parse the rest of the discussion in two directions. The first direction is just unpacking for everyone, you've mentioned a couple times, Chinese payments, Chinese mobile payments, what is that? So let's that's one thread of our my line of questioning. And the other thread is just about the Chinese consumer market, whether it's here domestically in Canada or internationally. So, let's start with the beginning. What, what is Chinese mobile payments? Isn't it, it what, how is it different from Visa, you mentioned, you Alipay (inaudible), Really unpack that for us and help us understand why those are different and how those transactions happen in Canada,
Martin McCann
I've been with OTT Pay for nearly two years, two years sorry, two years now. And, all the confusion of what is this, is really based in as Westerners, we're used to Visa, MasterCard, and Interact. You almost have to unlearn a little bit or, what you know about those. And then open your mind up to this new this new payment type.
So, there's two terms were using. You'll hear the term “Chinese digital payment” or, We don't use China, Chinese “mobile” payment anymore cause its eliminating, it almost implies have to have a, you just have to have a phone or only work on a phone. We've used the term “Chinese digital payment” because it truly is an omni channel approach. So again, the number one is the QR code. Which is quick response code. Which is, without getting into too much detail. It's a 1990 technology that was originally created out of Japan for the automotive industry for identifying inventory.
Michael LeBlanc
But I thought that the QR code had seen its day. It's, on a side note, it's so funny to have the renaissance of the QR code because it's this ugly little thing that for about five years found its way in the most unusual places, and everyone saying “Oh, thank god that's gone. There's no use for it anyway”. But then now it's had its renaissance, and it's really found a great home in payments and other things, right?
Martin McCann
Yeah. And you're starting to see Visa, MasterCard, starting to adopt it. A lot of it is driven by the fact that you don't need a physical card. There's some security features that are in there. Other benefits that it can be used with all the (inaudible). But you're right, it's just, it's, it's a rehash of an old, an old technology. It's very
Michael LeBlanc
And for many years you needed in its early days, you needed a QR reader on your mobile device. Which was another thing to download and open up. But now it just works when you just, you know, open up your camera, right? That's another big step forward.
Martin McCann
A QR scanner is simply a camera. So, everyone through all the phones or all the phones are equipped to do them. And the new next generation of point of sale machines that retailers are using come with a scanner or sort of camera.
Michael LeBlanc
Okay, so I'm a blank slate. I have forgotten about Visa, MasterCard, and all that.
Martin McCann
As far as Brands there are several of them. But the biggest ones, in the names you will hear most about, are WeChat Pay, Alipay. And we all know China UnionPay because they've had a presence in Canada with DMV card for over 20 years, but they also have a QR code-based serves code called UPI, which is UnionPay International. So, WeChat Pay, Alipay and UPI QR code are the biggest providers of the service. But before you understand how it's actually used, you have to know a little bit more about how the Chinese consumer behaves or how they behave that, they've learned and how they want to replicate that in Canada.
So, I'd encourage the listeners to go online and Google “WeChat” and “WeChat Pay”. There's lots of five-minute videos to give you a feel for just how powerful a platform is within the Chinese community. So, imagine for a second we combine Google, Twitter, Snapchat, eBay, Amazon, all the platforms that as North Americans we talk constantly, toggle back and forth between the daily, daily basis. That's called WeChat. And then, when you're in this all-encompassing platform, doing everything that you do today, back and forth, you need to buy something, there's an app in there, and it's called WeChat Pay. And this system is ingrained in Chinese culture.
So, I will give you a bit of a pre COVID example here. So, if you were in a mall, and you went to the food court, and you identified a group of people as being Asian. And that group of people happened to be Chinese. And they were all on their phones. There's probably about a 95% chance there in WeChat ecosystem. It's that dominant. And for any of our listeners that are Chinese or have Chinese friends, they can, they can validate everything I'm saying. It's a very, very powerful mechanism that Chinese people use. So, they're used to using that. And they're used to paying while they're inside of that mechanism by WeChat Pay, Alipay or UPI QR code.
Michael LeBlanc
So spin the lens around quickly, just a little bit. So, if I'm a user of WeChat Pay is it hooked up on the back end to my bank account? like how does that money?
Martin McCann
Yeah, so there's so there's some nuances. So, I could not get a WeChat Pay account because it's tied to a Chinese bank account, I'm not Chinese. So, the only people that can use WeChat Pay, Alipay, etcetera, are Chinese nationals. You have to have a bank account in China. So, one of the benefits of it, it allows Chinese people greater access to their money because there are some restrictions on how much physical other than electronic access all their money in China. So, the result of all this is that China has been going cashless before going cashless was kind of cool. There are, again, you can search on YouTube, there are cases on there of children, young people, shopping, who've never ever, ever used cash. And as a result, many merchants won't accept cash. They only accept WeChat Pay Alipay, China and China UnionPay. So, imagine, if you or I were in China, and it's time to eat, or you want to do some shopping. We have a limited amount of currency on us. Perhaps there's a language barrier. And you look around and you see a Visa logo on a store window. Well, you or I will feel much more comfortable. You would feel hey, I can go in and really spend to my capabilities.
Michael LeBlanc
And it's safe. You’d assume it was safe too right? You'd assume, “Okay, Visa, they’re a Visa merchant” and so I can safely transact. That would be my assumption anywhere in the world, right?
Martin McCann
You knew that brand represents something to you. So, flip that on its head and apply it to a Chinese consumer who sees a WeChat logo on a, on a retailer in Toronto. So, what we're trying to do is assist retailers in creating that environment.
Michael LeBlanc
So, it becomes, it becomes something the Chinese consumer, whether internationally or domestically, feels comfortable transacting with.
Martin McCann
Exactly and again, and when I say about that Visa logo, it can be virtual. It could be on an ecom website. Yeah, for example, Air Canada, as an example, accepts WeChat and Alipay for your ticket checking over those logos appear on there.
Michael LeBlanc
And that's done via the QR code on the website. Is that right?
Martin McCann
Yeah, there’d be a QR code on there. And then you would just scan it with your phone.
Michael LeBlanc
Wow. All right. Well, let's talk about the second side of this, the second side of the album, so to speak. And that’s not the B side, but the other side, which is how big an audience are we talking about? Like, you know, if we're thinking I mean, right now, we're pretty much talking domestic Chinese consumers because there's no international travel. That will resolve itself next year. But how big is the opportunity here in Canada? I mean, why can't they just, you know, as a community, would they, they would likely have a Visa or MasterCard or traditional payment like these? “A”, how big is the opportunity? And “B” even domestically, why is it an advantage to retailers to offer yet another payment?
Martin McCann
Yeah, so there's two parts to your question is kind of who are the constituents of the marketplace? Hey, listen I got a Visa, why do I do to use this?
The first question is basically there are four groups. You identified one of them as a Chinese traveler to Canada and always also the Chinese traveler within Canada. Obviously, COVID has essentially wiped that out.
Michael LeBlanc
Yeah, for now, for now.
Martin McCann
The next group is China students in Canada. There's close to about 200,000 of them here now.
Michael LeBlanc
Wow, really. Still eh?
Martin McCann
So there's, their consumption. There's the Chinese Canadian community. Very large part of the of the Canadian mosaic, the Chinese community.
And the fourth, the fourth category is, any Chinese consumer can access the retailer's website, anywhere in the world. And part of what we offer is brick and mortar. But we can also, one of the core competencies we have is to take your brand into the WeChat ecosystem. For any of my colleagues that are listening, they'll realize that that is not an easy thing to do, unless you know how to do it. So, an example, to get on to WeChat. ecosystem, you have to have a WeChat official account. That takes about a year to get one if you don't know what you're doing.
Michael LeBlanc
Yeah, well, it's kind of circles back to the beginning of the conversation. These things seem easy, but they're far from it right?
Martin McCann
Exactly. That's part of the value that we offer. We're a Canadian company that we are very strong. In China, so
Michael LeBlanc
So what you're saying and it's, I want to stick on this point for a bit, because of course, we have no you know, Chinese nationals visiting us here to explore our country, I think something like 800,000 came in 2018 last numbers, like it's a huge destination. So, they can't come here. But what I think you're saying is that they can shop from China, on sites, Canadian sites via WeChat and pay with their preferred tender type is that uh, am I getting that right?
Martin McCann
Exactly. If you're used to China, if you used to Chinese travelers and example a lot of times, they pre book. So, they will pre booked their hotel before they come here. And they'll do that in, within the WeChat ecosystem.
Michael LeBlanc
Gotcha
Martin McCann
By the same kind of same token across a shop within. But we can pay to the retailer (inaudible). And there's some specialized there's, there's some specialized vehicles that you used to go in because buying patterns or Western patterns and it's a little bit too much detail to get into on here. But it's their marketing tools that we have and we use. It, we can take them into China with.
So, the other thing is what the point is, is so let's talk about travel. Travel for a pause for a little while. Let's just talk about the kind of domestic opportunity which is a Chinese student and the Chinese Canadian community. And I'd also like to add a sizeable chunk of our processing business was travel. You know, we have relationships with Toronto tourism, Montreal tourism, Agritourism, all those players. You know, Ripley's, the ROM. Obviously, all of our processing businesses come from across the hall. However, our volume, year to year is up. Year over year, a lot of it’s ecomm. And there's a misconception in the brick and mortar world Is that, okay, It's only Chinese merchants that want this. Like Chinese restaurants, Chinese grocery stores, bubble tea shops. That's not, so they are very interested in and they're very, very important heavy users. But the view that, viewing the market like that, is very limiting. The market is anyone who sells to Chinese consumers interested. For example, we've got several national furniture chains that accept WeChat Pay today.
Michael LeBlanc
Wow. And now is there, is there a transaction limit? Like I know, in the conventional world, there's not. The limit is at the consumer level, right?
Martin McCann
Exactly. So, it's at the consumer, it’s at the consumer level.
Michael LeBlanc
So you know, you kind of transitioned into where I want to go for the listeners, which is okay, so you've got everyone interested if they're, if or at least way more informed around this opportunity. How hard is it to do as a retailer? How long does it take? and they've got you, they call you up and they say, “Martin, I want this I love this idea. How long is it going to take? And how much is it going to cost?” You know, what does it, give me some broad indications. Kind of order of magnitude of these things?
Martin McCann
Sure. So, on the on the technology side, because that's a key decision that the retailer we're making. How hard, how difficult is it to be to implement into my current process? So, a lot of us have battle scars for that we had to go through when implementing, you know, moving from magstripe to EMP or, you know, adding this or adding that to traditional Western payment.
The way we've designed everything is very, very straightforward. So, we offer everything from a proprietary standalone device, so we've plunk down a device on your desktop. And we're only run Chinese mobile payment, or we can put Visa MasterCard on there as well. That's the optimal for a lot of retailers because of the value of that retail space for them. A lot of them are more interested in “Okay, how do I integrate into my existing cash register?” So, the quick answer is, we are already established and working with partnerships with most of the, or the largest processors in Canada. Where our application can either run on their device. Coexists with their device’s in the application. We also work with third party integrators and put our application through them directly into the (inaudible). Integration part is very, very straightforward. There’s not pain points that a lot of retailers have to suffer going through. In the ecom world, we can plug into Shopify. We can plug into any of the other third party sites. Or we plug it directly into the back end for the for the retailer. So, we adopt to whatever the retailer wants. And it's relatively straightforward. Only weeks rather than months.
We pride ourselves on the fact that if a retailer was to call me and say,” Listen, I want to be up and running as quickly as we can”, we can actually have you up and running in a couple of days. And this is the beauty of QR code technology. So, you might say, “Well, how do you do that?” So, we can literally come into your store and put a static QR code on the back of your cash register. And on our back end, we have you onboarded and scan your QR code, and it now turns their phone into the POS machine. And the transaction on the phone. We can, quick and dirty is kind of not the right phrase. But if somebody wants you up and running super-fast, we can do that while we work on the integration in the backend. So, it's very, very straightforward. Very, very simple.
All major costs, you have to have to pay a third party to do any tweaking, or anything like that. It is very, very straightforward.
Michael LeBlanc
And now there's a merchant fee to the merchants to take, to do the transaction. Is that a percentage fee? How does that work?
Martin McCann
Yeah, so it's so it's, it's the business model is very similar to say Visa, MasterCard, or Interact. Generally speaking, the transaction rates that the merchant pays are lower than Visa and MasterCard. Driven a lot by the fact that the and I'm doing a bit of a reputation here, the interchange rates, with the with the Chinese low payment schemes, is lower than Visa or MasterCard.
Michael LeBlanc
Now it is sometimes the case, depending on the card the consumer pulls out of the wallet, you're gonna pay a slightly different fee if you're using a conventional credit card. Is that the case with WeChat and these Chinese payments as well?
Martin McCann
No, the only the only. So, it's similar in brick and mortar. It's just more or less the same interchange rate for brick and mortar. There is one that differs on ecom with a higher interchange rate. They're all, they're all public knowledge. You can google them and see them. But not so, there's no fee for a point based Alipay account or WeChat Pay account or anything like that. It's the closest analogy we bring it. It's kind of like a quasi-interact in that because it's transactions coming out of a bank account. It's not coming out of necessarily a direct credit line.
Michael LeBlanc
Well, listen, you've answered in what are we talking about? over just over 20 minutes, you've answered a lot of questions that I've had, you know, I've been a participant in the opportunity. But it really I had a lot of questions and you've done a great job answering both the opportunity and the where. How do people get in touch with you? If they want to pursue this a bit further.
Martin McCann
So, they can reach me, the easiest way would be to reach me at martin.mccann that’s m-c-c-a-n-n @ott.ca.
Michael LeBlanc
All right, I'll put I'll put that in the show notes, well, I'll put your email in the show notes as well and the connection to the website so people can learn more and reach out and continue the conversation.
Well, listen, Martin, thanks for coming on The Voice of Retail and talking about this opportunity. Its wonderful to have you share that with us and I wish you much continued success and as we continue to explore these opportunities for the merchants.
Martin McCann
Great. I appreciate the opportunity. Thanks, Michael.