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Uncovering the secret to Alipay’s success in China

Nurdianah Md Nur | May 5, 2015
Zhang Dayong of Alipay talks about how his company is driving mobile payment adoption in China through Alipay.

Zhang Dayong of Alipay
Zhang Dayong, Head of Alipay in Southeast Asia

Synonymous to online/mobile payments in China, Alipay is the largest third-party online payment service provider in the country by total payment volume, according to market research firm iResearch.  

Alipay provides escrow services -- in which consumers can verify whether they are happy with goods they have bought before releasing money to the seller --  for Alibaba Group's marketplaces such as Taobao and Tmall, as well as third parties in China. Such payments can be made either via the Internet or mobile devices, bringing convenience to customers. However, such services have raised security concerns with consumers, especially since Alipay is not a financial institution but is providing financial services.

In an exclusive interview, Zhang Dayong, Head of Alipay in Southeast Asia, shares with bankITasia how his company is addressing this hurdle to stay ahead of its competitors. He also provides insights to the state of mobile payments in Asia today.

The mobile payment space is becoming crowded with banks, payment providers, and telcos trying to get a piece of the pie, but how is the uptake of mobile payments like in Asia? 
We expect to see a rapid growth in the uptake of mobile payments in Asia despite the competition in the industry. The uptake is driven by high smartphone penetration (as high as 80 percent) in countries like Singapore and China. The rate of smartphone adoption is also higher than that of computers in countries like Singapore, Thailand and Indonesia. Recent research has also found that online transactions take place more predominately on mobile as compared to on computers. [1] 

This is evident in the number of real-name registered Alipay users. Alipay also provides payment solution for nearly 10 million small and micro businesses and has more than 300 million real-name registered users. We handle more than 80 million transactions daily, and the Alipay Wallet mobile app has 190 million active users.

Besides the increasing number of mobile devices and the convenience it brings, are there any other factors encouraging consumers to use mobile payments instead of traditional forms of payment?
At Alipay, we emphasise on bringing customers the convenience, safety and quality user experience. We have partnered more than 200 financial institutes and 10 million merchants to help provide the ease of cashless transactions. Another factor that encourages consumers to use mobile payments is the ease of mind Alipay provides -- by implementing the escrow strategy, customers can be assured that they are only billed when they receive their purchases in good conditions.

In Asia, security breaches may be a factor that deters mobile payments adoption. As one of the world's largest e-commerce markets, Asia is expected to become one of the key targets for cybercriminals. To help safeguard our customers' transactions, we have invested RMB40 million (USD6.5 million) to conduct research and partner with companies to develop security software. To provide a more holistic approach to cybersecurity, Alipay has also partnered with anti-phishing organisations and browser companies to shut down 155,282 phishing websites.

 

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