Pay­ment ser­vices make global ex­pan­sion push

Ant Fi­nan­cial in­tends to serve 2 bil­lion glob­ally over the next decade

China Daily (Hong Kong) - - FRONT PAGE - By CE­CILY LIU in London and HE WEI in Shang­hai

When 33-year-old Shang­hai res­i­dent Xu Lei walked into the Santa Claus Vil­lage tourism of­fice in Rovaniemi, Fin­land, he was sur­prised to spot a sign with the Chi­nese word zhi.

That’s the logo of Ali­pay, the fast­grow­ing mo­bile pay­ment ser­vice of China’s e-com­merce gi­ant Alibaba. It meant Xu could use the Ali­pay mo­bile app on his phone to scan a QR code pro­vided by the tourism of­fice to pay for his Arc­tic Cir­cle visit cer­tifi­cate, just like he would do in China.

“I was shocked, and felt that I now truly un­der­stood what a pow­er­ful and global or­ga­ni­za­tion Ali­pay is,” Xu said.

In Ja­pan, Li Yiy­ing, a 25-year-old Chi­nese woman trav­el­ing in Tokyo, also ben­e­fited from pay­ment ser­vices pro­vided by Chi­nese com­pa­nies.

“I of­ten pre­fer to use Ali­pay or WeChat Pay (mo­bile pay­ment pro­vided by China’s Ten­cent) in­stead of cash so I don’t need to take a lot of paper money with me. It is also eas­ier to keep track of trans­ac­tions with the app,” Li said.

From buy­ing lux­ury bags to pay­ing Uber bills, from con­ve­nience stores to

theme parks, China’s top wire­less pay­ment providers are tap­ping into the in­ter­na­tional mar­ket in the foot­steps of globe-trot­ting and big-spend­ing Chi­nese vis­i­tors.

Ali­pay has emerged a fron­trun­ner. Cre­ated in 2004 as a tool to fa­cil­i­tate trans­ac­tions on Alibaba’s Taobao e-com­merce site, it is now ac­cepted by more than 100,000 mer­chants over­seas, ac­cord­ing to a re­port from Ant Fi­nan­cial, the di­vi­sion of Alibaba that owns Ali­pay.

Ant Fi­nan­cial banks on its 450 mil­lion users in China as it rolls out busi­ness abroad. Ali­pay han­dled around half the es­ti­mated $738 bil­lion Chi­nese spent on­line last year by of­fer­ing an es­crow ser­vice in col­lab­o­ra­tion with over­seas part­ners such as banks, fi­nan­cial in­sti­tu­tions and on­line pay­ment providers, ac­cord­ing to iRe­search.

In Fin­land, Ali­pay is ac­cepted by over 100 mer­chants, in­clud­ing ho­tels, shops and restau­rants, through a part­ner­ship with lo­cal mo­bile pay­ment firm ePassi. In Ger­many, its part­ner­ship with pay­ment pro­cess­ing ser­vice Con­car­dis gives it ac­cess to more than 200,000 lo­cal mer­chants.

Ali­pay also works with BNP Paribas, Bar­clays, Yusin Bank, SIX, Wire­card, In­genico Group and other agen­cies in Europe, which helps it cover some 930,000 mer­chants in the con­ti­nent.

In Ja­pan, where Chi­nese tourists of­ten buy ex­pen­sive house­hold elec­tron­ics prod­ucts, jew­elry and cos­met­ics, Ali­pay is avail­able at nearly 3,000 ven­dors.

To quench the thirst of wealth­ier Chi­nese buy­ers, Ali­pay was in­tro­duced to 10 ma­jor over­seas air­ports across Ger­many, Ja­pan and New Zealand in Oc­to­ber. De­par­ture tax re­fund ser­vices pro­cessed by Ali­pay are also avail­able in 23 coun­tries. It can be used to pay for Uber and Grab ride ser­vices in 70 coun­tries.

Other do­mes­tic wire­less pay­ment pro­vides like WeChat Pay and Baidu Wal­let are also ex­pand­ing over­seas.

Ten­cent Hold­ings, a so­cial networking gi­ant, has al­lowed for­eign stores since late 2015 to ap­ply to be part of its WeChat pay­ment sys­tem as long as they have a trad­ing li­cense and a web­site or an app. So far, the WeChat mo­bile sys­tem has been ac­cepted in over 10 coun­tries and re­gions.

On­line search gi­ant Baidu an­nounced in Septem­ber that it would join with Is­raeli startup Trav­el­ers Box to pro­vide a con­ve­nient way for Chi­nese trav­el­ers to ex­change their un­used for­eign money be­fore re­turn­ing home.

Trav­el­ers can choose to credit their Baidu Wal­let ac­counts by de­posit­ing money at Trav­el­ers Box kiosks at air­ports in some of the most pop­u­lar coun­tries for Chi­nese tourists, in­clud­ing Ja­pan, Italy and Canada.

The col­lab­o­ra­tion be­tween Chi­nese and for­eign com­pa­nies is ben­e­fit­ing both sides. Shops that ac­cept Chi­nese wire­less pay­ment sys­tems, for ex­am­ple, see more Chi­nese cus­tomers.

But the am­bi­tions of pay­ment providers does not stop there.

Ant Fi­nan­cial in­tends to serve 2 bil­lion cus­tomers over the next decade glob­ally, with more than 60 per­cent of those users from out­side the Chi­nese main­land.

Apart from set­ting up six branch of­fices — in the United States, Sin­ga­pore, South Korea, the United King­dom, Lux­em­bourg and Aus­tralia — the com­pany picked ex-Gold­man Sachs banker Dou­glas Fea­gin to smooth the way for its global push.

Through sign­ing pacts with fi­nan­cial in­sti­tu­tions and distribut­ing tech­nol­ogy to re­tail­ers, the com­pany is pre­par­ing the ground for what could be­come a ma­jor ri­val to bank­ing mo­nop­o­lies and the likes of Visa.

In the US, Ant Fi­nan­cial teamed up with pay­ment tech­nol­ogy providers First Data Corp and Ver­i­fone to ex­pand its pres­ence through their ex­ten­sive mer­chant net­works.

“We aim to have at least 1 mil­lion mer­chants out­side the Chi­nese main­land ac­cept­ing Ali­pay in three years. Work­ing with our net­work of global part­ners like First Data and Ver­i­fone will help us achieve the goal,” said Fea­gin, se­nior vice-pres­i­dent of Ant Fi­nan­cial and head of Ali­pay In­ter­na­tional, in a speech at the Money 2020 event in Las Ve­gas.

Jeong­wen Chi­ang, a pro­fes­sor of mar­ket­ing at China Europe In­ter­na­tional Busi­ness School, praised the po­ten­tial of on­line pay­ment by com­par­ing

We aim to have at least 1 mil­lion mer­chants out­side the Chi­nese main­land.” Dou­glas Fea­gin, se­nior vice-pres­i­dent of Ant Fi­nan­cial

Ali­pay with China’s UnionPay, the world’s third-largest pay­ment net­work by value of trans­ac­tions pro­cessed. UnionPay trails only Visa and MasterCard, ac­cord­ing to Novem­ber statis­tics com­piled by the US re­search ser­vice BI In­tel­li­gence.

“UnionPay is great in help­ing Chi­nese trav­el­ers make pay­ments over­seas, but it still re­quires con­sumers to carry a card,” Chi­ang said.

“Ali­pay is amass­ing a large amount of data on its cus­tomers’ spend­ing habits, and its big data ca­pa­bil­i­ties are cur­rently greater than UnionPay’s. It helps Euro­pean mer­chants more ef­fi­ciently tar­get Chi­nese shop­pers.”

China’s Big-Data-Re­search found that trans­ac­tions via mo­bile pay­ment ser­vices, worth 9.3 tril­lion yuan ($1.3 tril­lion) in 2015, are ex­pected to in­crease to 15 tril­lion yuan in 2017.

PRO­VIDED TO CHINA DAILY

China’s e-com­merce gi­ant Alibaba in­tro­duces its Ali­pay pay­ment ser­vices at the Santa Claus Vil­lage in Fin­land on Dec 6, with a pro­mo­tional event. Ali­pay is ac­cepted by over 100 mer­chants in Fin­land.

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