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Alipay

Introduction

Ali Pay is a virtual third party online payment platform. It was established by the Ali Baba group
of companies in 2004 for Taobao. Taobao was one of the online shopping initiatives by Ali Baba.
Ali Pay was established to provide a safe and secure online payment platform for its online
customers. Currently, Ali Pay is one of the largest mobile paying solution with over 870 million
users. It makes up 54.26% share of the payment market in MainLand China. In 2017, Ali Pay
introduced their facial recognition payment service. The parent company of Ali Pay was
rebranded and renamed as Ant Financial Services Group.

Services

Ali Pay has collaborated with 65 financial institutions including Mastercard and Visa. It provides
its service to Taobao and a several other small Chinese online startups since they cannot afford
to have their own mobile payment system. Majority of the application functions with all but some
only work with Chinese debit/credit card. Every user has its own ID and password to protect their
accounts.
Alipay is used in smartphones with their Alipay Wallet app. QR code payment codes are used for
local in-store payments.The Alipay app also provides features such as credit card bills
payment, bank account managements, P2P transfer, prepay mobile phone top-up, bus and train
ticket purchase, food order, ride hailing, insurance selection, digital identification document
storage. Alipay also allows online check-out on most Chinese-based websites such
as Taobao and Tmall. The Alipay app allows users to add their own services provided from
different companies to create a more personalised experience.
Ali Pay does not only facilitate online businesses but is widely used to pay for property taxes,
utility bills, fines, cable fees etc.
On 15 January 2009, Alipay launched a credit card repayment service, supporting 39 domestic
bank-issued credit cards.[21] It is currently the most popular third-party repayment platform. The
main advantages are free credit card bills checking, repayments with no administrative fee, as
well as automatic repayment, repayment reminders and other value-added services.[22] In the
first quarter of 2014, 76% of credit cards were also paid by Alipay Wallet.
From December 2013, several chain convenience store companies, including Meiyijia, Hongqi
Chain, and Qishiduo C-STORE and 7-Eleven, have successively supported Alipay payment; in
December, Beijing taxi drivers began to accept Alipay to pay the fare. Subsequently, Wanda
Cinema, Joy City, Wangfujing and other large-scale retail companies as well as movie theaters,
KTV, and catering companies have access to Alipay.
Security

Alipay provides multiple security mechanisms to make sure that user accounts are safe. An Alipay
account requires the user to set up their own login password and separate payment password,
which need to be different. The user can enter the login password up to five times and the
payment password up to three times before the user is locked out of his or her account. To regain
access to the account, the user must contact Alipay They also install a digital certificate, which
can encrypt information sent over a network, preventing hackers from stealing passwords,
thereby enhancing the security of online transactions.
Alipay is conceptually similar to Apple Pay, WeChat Pay and PayPal because it overlays
traditional card payment methods. Although users receive immediate notification of the
transaction, the main difference among Alipay and an instant payment system,
like Venmo or Zelle is that the funds transfer between counterparties is not immediate. The
settlement time depends on the payment method chosen by the customer, while for instant
payment systems, the funds are transferred within seconds or minutes.

Current Value

According to a new report released by the UN-based Better Than Cash Alliance, users sent $1.7
trillion in total payments through Alibaba’s Alipay service last year, compared to only $70 billion
in 2012;

Impact of Alipay on the rest of the world


Valued at $60 billion, Ant Financial has been using all the money it has raised to make strategic
investments as well as establishing strategic partnerships around the world. It started in 2015
with a $680 million investment for 40% shares into Paytm, the mobile payment startup in India.
The investment was very effective — by the end of 2016 Paytm claimed to have 177 million users
out of the total 220-million smartphone user base in India, a staggering 80% market share. With
the Indian ecommerce market estimated to reach $200 billion by 2020 and the number of
smartphone projected to go over 800 million by 2021, Ant Financial as well as Alibaba’s
ecommerce and logistics platforms are expected to further benefit from Paytm’s dominance in
the Indian market. Meanwhile, Alibaba also led a round of $500 million investment into Snapdeal,
an ecommerce leader in India. Later in Dec 2015, Ant Financial formed a partnership with
Wirecard to process POS payments in Europe, as the first movement to tap into the European
market.
May 2016 was a watershed moment, when Ant Financial made headlines on international media,
as it hired Douglas Feagin as SVP for International Operations. A graduate of University of Virginia
and Harvard Business School, Mr. Feagin worked as the Head of Financial Institutions Group for
Americas and Asia at Goldman Sachs. Soon after Mr. Feagin joined Ant Financial, it formed a
series of partnerships around the world, including Paysbuy in Thailand for online-to-offline
payments, Ingenico, Zapper and Concardis in Europe for mobile POS payments, and Verifone and
First Data in the US.
In July 2016, Ant Financial led a massive round of financing into M-Daq in Singapore, which a
forex product for ecommerce platforms in the region. In Nov 2016, Ant Financial acquired 20%
shares of Thailand’s Ascend Money, to grow its digital and offline payments and financial services
in Thailand while opening doors to Indonesia, The Philippines, Vietnam, Myanmar and Cambodia
where Ascend Money also operates in. All of these deals were announced before the Nov 11
online shopping festival and the winter tourism seasons. As a result, Alipay transaction volume
on Nov 11 grew 48% to about $20 billion, from 235 countries and regions around the world.
More recently in Feb 2017, Ant Financial announced raising $3 billion in debt financing. Almost
at the same time, it also disclosed a series of investments including $880 million acquisition of
MoneyGram in the US, an undisclosed amount in Mynt, which provides micro-payment service
and mobile loan service in the Philippines, and $200 million in Kakao Pay, the mobile payment
subsidiary of South Korean messaging platform giant Kakao, or the WeChat of South Korea. Also,
Alipay announced a partnership with Citcon in the US.
Ant Financial’s investments and partnerships mostly follow the most attractive destinations for
Chinese tourists and businessmen, such as the US, Europe, and Southeast Asia, except for India
where it was going after the huge potential for ecommerce boom. For example, the first
merchants in the US to sign up for Alipay in-store POS are duty-free stores in major airports like
New York and San Francisco, high-end retail shops, hotels in Las Vegas, and Chinese restaurants
in major cities. In fact, it is a very sound strategy — just over 1 week during the Chinese New Year
holiday 6 million Chinese tourists travelled around the world and spent more than $15 billion.
Ant Financial’s latest round of funding, reported to involve Singapore’s Temasek Holdings Pte, is
said to value the Chinese provider of mobile payments at about $150 billion -- 50 percent more
than Goldman Sachs Group Inc.’s market capitalization.
That would not only make Zhejiang Ant Small & Micro Financial Services Group the world’s most-
valuable startup, it would jump the payments business founded by Alibaba Group Holding
Ltd. Chairman Jack Ma into the top 15 among banks, insurers and credit providers by market
value.
Ant Financial is seeking to raise at least $10 billion in a funding round, according to reports by
Bloomberg, citing people familiar with the matter. At a $150 billion valuation, the operator of
Alipay and a money-market fund would rank 14th among financial-service firms