Ali­pay in push to lure mo­bile users

China Daily (Hong Kong) - - BUSINESS - By HE WEI in Shang­hai hewei@chi­nadaily.com.cn

Ali­pay, the coun­try’s largest third-party pay­ments com­pany, will waive newly in­tro­duced com­mis­sions for trans­ac­tions con­ducted via mo­bile plat­forms, in a bid to get more of its users on its mo­bile ap­pli­ca­tion.

Ali­pay, a sub­sidiary of e-com­merce gi­ant Alibaba Group Hold­ing Ltd, will start levy­ing a fee of 0.1 per­cent of the to­tal value of trans­ac­tions, ac­cord­ing to a re­cent com­pany an­nounce­ment.

That trans­lates into com­mis­sion fees start­ing at 0.5 yuan (8 cents) per trans­ac­tion and up to a max­i­mum fee of 10 yuan. Pre­vi­ously, trans­ac­tions with a value be­low 10,000 yuan were ex­empted from such fees.

How­ever, com­mis­sions will be waived for credit card pay­ments, in­ter-bank trans­ac­tions and pay­ments of util­ity bills, if those trans­ac­tions are con­ducted via mo­bile de­vices.

“We will main­tain free-ofcharge ser­vices if users choose to go with Ali­pay’s mo­bile app,” Ali­pay said.

The move, along with a se­ries of other re­cent en­deav­ors, un­der­scores the need for Alibaba to stay ag­ile in the mo­bile e-com­merce age, as some of its ri­vals on the mo­bile front are erod­ing its huge client base.

The com­pany has re­cently launched Ali­pay Wal­let, a mo­bile ver­sion of Ali­pay, as a stand­alone brand un­der the newly es­tab­lished Zhejiang Alibaba E-Com­merce Co Ltd, which han­dles the fi­nan­cial busi­nesses un­der the Alibaba em­pire.

It’s also try­ing to get online mer­chants sell­ing their prod­ucts on Taobao.com mar­ket­places to switch from their desk­top PCs to mo­bile phones, by in­vest­ing 500 mil­lion yuan to de­velop a mo­bile ser­vices plat­form and dis­trib­ute smart­phones to lure elec­tronic re­tail­ers, Alibaba said on its web­site.

In another push to ex­pand its user base, in Septem­ber, Alibaba launched Lai­wang — a mo­bile chat app sim­i­lar to Ten­cent Hold­ing Ltd’s WeChat — which gained trac­tion quickly and gave it a boost on the mo­bile In­ter­net sec­tor.

The num­ber of Lai­wang’s reg­is­tered users has sur­passed the 10-mil­lion mark, Jack Ma, the chair­man of Alibaba, said in a brief­ing in Novem­ber, adding that the com­pany is tar­get­ing an in­crease to 100 mil­lion by the mid­dle of next year.

The move is crit­i­cal to “fun­nel young and tech-savvy users to Alibaba’s mo­bile ecosys­tem”, which will serve as the ac­cess point for e- com­merce ser­vices and to a sta­ble stream of rev­enue, said Alibaba’s Chief Ex­ec­u­tive Of­fi­cer Jonathan Lu at the same event.

The com­pany has also launched Yue­bao, which was co- de­vel­oped by Ali­pay and Tian­hong As­set Man­age­ment Co Ltd, an online money-mar­ket fund that prom­ises higher re­turns than sim­i­lar prod­ucts. About 16 mil­lion users in­vested 130 bil­lion yuan by Oc­to­ber, mak­ing it the coun­try’s largest pub­lic fund, said Fan Zhim­ing, pres­i­dent of Alibaba’s small and mi­cro fi­nan­cial ser­vices unit.

The com­pany’s mo­bile push has al­ready started to pay div­i­dends, as is ev­i­dent from the soar­ing growth of mo­bile e-com­merce trans­ac­tions dur­ing the Nov 11 online shop­ping fes­ti­val. About 21 per­cent of the to­tal num­ber of trans­ac­tions recorded dur­ing the 24-hour pe­riod was com­pleted through mo­bile de­vices, up from just 5 per­cent last year.

How­ever, it’s an “open se­cret” in the in­dus­try that Alibaba has essen­tially missed an ear­lier tar­get of 8.8 bil­lion yuan for mo­bile trans­ac­tions, said Zheng Liang, di­rec­tor of the e- com­merce di­vi­sion at re­search firm Nielsen in China.

Alibaba is strug­gling to trans­late the suc­cess it had with users of desk­top PCs to the mo­bile arena, with ac­tive ac­cess points sig­nif­i­cantly lag­ging be­hind Ten­cent’s WeChat, Zheng said.

The WeChat app added pay­ment func­tions in Septem­ber and it en­ables smooth trans­ac­tions by link­ing users di­rectly with banks with­out the need for an in­ter­me­di­ary such as Ali­pay.

“The mo­bile phone pay­ment ser­vice on WeChat marks a key step on Ten­cent’s path to de­velop e-com­merce ser­vices. And it pro­vides a mo­men­tum that is reshaping the whole in­dus­try, mak­ing us be­lieve that fu­ture pay­ments will hap­pen on mo­bile de­vices in a dif­fer­ent way,” said Yi Fang­han, an in­de­pen­dent In­ter­net in­dus­try an­a­lyst and blog­ger.

Mean­while, ob­servers pointed out that some users said that they might stop us­ing Ali­pay af­ter the new fees are in­tro­duced.

“My mother al­ways puts money on a reg­u­lar ba­sis in my Ali­pay ac­count be­cause it’s con­ve­nient and it costs noth­ing. I’m not sure she will con­tinue to do so af­ter the ser­vice starts charg­ing fees, es­pe­cially since she doesn’t know how to use a smart­phone,” said Guan Xin, a stu­dent in Shang­hai who is orig­i­nally from Shan­dong prov­ince.

Ali­pay still dom­i­nates the Chi­nese In­ter­net pay­ment mar­ket. Ac­cord­ing to a re­port re­leased by con­sul­tancy Analysys In­ter­na­tional, Ali­pay had a 46.3 per­cent share of the online pay­ment mar­ket in the first quar­ter of 2013, fol­lowed by Ten­cent’s Ten­pay, which had 20.3 per­cent.

LI YUN­FENG / FOR CHINA DAILY

An ad­ver­tis­ing bill­board for Ali­pay is seen in Bei­jing.

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