Thus far, most of Alipay’s impressive success comes from the Chinese market, where it enjoys 90% public brand recognition, claims more than 400 million active users, and commands nearly 50% of the country’s third party payment market (in 2013 Alipay had a 48.7% share, compared to 19.4% for the nearest competitor, Tenpay). So despite its impressive 400 million plus active users—more than PayPal or even the entire U.S. population—Alipay still has room to grow. Now well entrenched in the Chinese market, Alipay is moving into the European and U.S. markets.
Alipay was already showing global ambition before it began working with the Chinese operations of large multinational companies such as Walmart, Carrefour, KFC, Uber, and many others to offer Alipay for Chinese consumers. Although these merchants do not all use Alipay outside of China, many European and American companies see it as a worthwhile partner. Companies that have embraced Alipay to access Chinese consumers include Macy’s, Saks Fifth Avenue, Bloomingdale’s, Ann Taylor and Aéropostale, among others. In October 2015 Alipay became available for use in the Frankfurt airport, and more European countries are expected to begin offering Alipay soon, as the European roll-out continues to gather speed.
Alipay connects European merchants with Chinese shoppers
It is far from secret that Alipay is a force in the payments industry, and European payment service providers (PSPs) should consider the benefits of providing merchants with access to the large Chinese market. In 2014, eCommerce transactions in China were valued at $2 trillion, representing 25% YoY growth, according to the Chinese Ministry of Commerce. It is also a market that is increasingly affluent: Chinese consumers want the high quality products in which European merchants specialize, and Alipay has the potential to be the bridge connecting these two groups.
Through its Online Cross-Border Payment Solution, Alipay offers European and U.S. merchants direct access to Chinese consumers without the need to set up shops in China, hire Chinese staff, or even open Chinese bank accounts. Chinese shoppers make seamless payments in RMB on payment pages that are in the Chinese language (although merchants’ websites are not, unless they have them translated). While the Online Cross-Border Payment Solution makes it easy to access the Chinese market, it isn’t enough for larger retailers that already have a physical presence in China. Those merchants are better served by Alipay’s domestic platform.
The impact on payment service providers
What does this all mean for payment service providers, especially those that have merchants that want to expand into what is potentially the world’s largest eCommerce market? Alipay, right now, offers one of the simplest ways to give merchants access to China. Alipay is the most trusted and well-known eCommerce payment method in a country where 642 million are online online and 565 million are using mobile devices. At only 47% and 41% of the population, respectively, the market still has plenty of room for growth.