Alipay beyond China: Everything you need to know

Ant Financial's Alipay is massive in China — so much that last summer, the People's Bank of China formally declared that it was illegal for a merchant to block acceptance of renminbi cash notes or coins. This was seen as an antitrust move, based on the government's desire to prevent Alipay or Tencent's WeChat Pay from dominating the country's payments landscape.

Alipay is as much a force to be reckoned with outside of China, but it has taken a strategic approach to foreign markets that downplays its potential as a threat to local payment systems. By operating through partnerships and acquisitions, with a focus on Chinese tourists rather than local spenders, Alipay has built a vast network with global reach.

This item is compiled from reporting by PaymentsSource writers including John Adams, Kate Fitzgerald, David Heun and Michael Moeser. Click the links in each item to read more.

With WorldFirst, Alipay plants roots in Europe
Alipay, Mastercard signage
A sign for Ant Financial Services Group's Alipay, an affiliate of Alibaba Group Holding Ltd., is displayed at a store in Bangkok, Thailand, on Thursday, Sept. 28, 2017. PSingapore and Thailand are in discussions about connecting their national digital payment systems to forge an unprecedented regional alliance, as officials step up efforts to curb the use of cash. Photographer: Amanda Mustard/Bloomberg
Ant Financial has entered a deal to acquire London payment company WorldFirst for about $700 million, giving its affiliate Alibaba and its mobile wallet Alipay a deeper hold in European markets and countering a potential money transfer play by Amazon and Western Union's collaboration, which is just starting to add countries.

The price is in line with earlier estimates and the deal is not a surprise, given WorldFirst recently announced it would close its U.S. operations, a move considered to be a hedge against U.S. regulatory pressure. Ant's earlier attempt to buy MoneyGram fell through because of political pressure, though MoneyGram still supports Alipay.

WorldFirst will keep its brand and operate as a U.K.-headquartered business, and will gain access to Alipay's customer base of more than 550 million people and a substantial merchant network in Europe that already accepts Alipay.
Alipay's non-competitive outreach in North America
UnionPay, Visa, Mastercard, Alipay, Apple Pay and other brands
Icons for various payment services are displayed above the opening-hours sign inside a Sa Sa International Holdings Ltd. store in Hong Kong, China, on Tuesday, Nov. 1, 2016. The urgency to prepare regulatory environments for fintech is growing as banks begin offering digital services such as biometric authentication and as mobile-payment systems such as Apple Pay and AliPay are introduced around the region. Photographer: Anthony Kwan/Bloomberg
Perhaps foreshadowing its failure to buy MoneyGram due to anti-China attitudes, Alipay came to the U.S. with a message designed to sound as unthreatening as possible to U.S. interests.

“Our whole goal in North America is to expand convenience for Alipay’s existing users wherever they go, and improving their shopping options so it’s easy for them to find other places to go—the last thing we’d want to do is go up against the third-party wallets in the U.S.,” said Souheil Badran, former president of Alipay North America, in 2017. Badran held that role from 2016 to 2018.

True to this statement, Alipay's U.S. deals focused on merchants who cater to Chinese tourists, such as 99 Ranch Market, a 50-store chain of supermarkets specializing in Asian products and food. One of Alipay’s first big integrations with a Chinese products specialist was a deal announced in 2017 with Han Feng, which serves Chinese supermarkets and restaurants on the U.S.’s east coast.

Alipay also works with travel-focused brands like the luxury travel retailer DFS Group, which launched Alipay's in-store mobile payment service in its Honolulu International Airport store in 2017. The Honolulu deployment followed Alipay's launch at San Francisco International Airport, Los Angeles International Airport and Kennedy International Airport in 2016.
Data-driven growth
Alipay QR code scanner
An employee scans a quick response (QR) code displayed on the Ant Financial Services Group's Alipay app, an affiliate of Alibaba Group Holding Ltd., inside a Sa Sa International Holdings Ltd. store in an arranged photograph in Hong Kong, China, on Tuesday, Nov. 1, 2016. The urgency to prepare regulatory environments for fintech is growing as banks begin offering digital services such as biometric authentication and as mobile-payment systems such as Apple Pay and AliPay are introduced around the region. Photographer: Anthony Kwan/Bloomberg
Alipay users consult the mobile app an average of 14 to 15 times a day, and each visit generates data. Alipay captures this data and plows it back into the app to sharpen the experience for consumers and merchants, Badran said during a keynote speech at SourceMedia’s PayThink conference in 2017.

“Whenever someone opens the Alipay app, we track it, so we can let merchants know where users are and we can notify Alipay users of nearby services, with deals and coupons, based on their location,” Badran said.

Alipay’s data engines analyze travelers’ activity with the app before, during and after their international trips, anticipating their plans and purchases, providing tips, reviews and even detailed descriptions and maps of stores users intend to visit.

“If an Alipay user is heading to San Francisco, we can offer them a coupon for a deal at Pier 39, so we may see a conversion rate of up to 42% on that coupon before they even go on the trip,” Badran said.

Alipay also monitors weather, sports and world political events to shape its deals and offers, and encourages users to share feedback about the stores, restaurants and sites they visit.

“We want consumers to think of Alipay as a digital lifestyle, and data analysis is a big part of that,” Badran said.
Doing more with MoneyGram, even after parting ways
MoneyGram store
A pedestrian passes a Western Union Co. and a MoneyGram International Inc. money transfer stores in Athens, Greece, on Thursday, June 21, 2012. Greece's stock market was put under review for reclassification to emerging markets by MSCI Inc., a change that would make the European Union nation the first advanced country to be cut to developing status. Photographer: Chris Ratcliffe/Bloomberg
If MoneyGram couldn't be taken under the wings of Ant Financial, which operates China's Alipay wallet, it is doing the next best thing.

In short, Ant Financial's bid to acquire MoneyGram last year ran into the political roadblock of President Donald Trump's disdain for the idea that a powerful Chinese company would acquire an American money transmitter. This stance led Ant to abandon its purchase of MoneyGram.

It left Dallas-based MoneyGram, with faltering earnings in 2017 and 2018 and a desire to become part of Ant Financial, in a position to embrace the same philosophy competitor Western Union has taken in turning to digital payments. In this case, it was seeking to possibly tag the MoneyGram name to a partner like Alipay that can help carry that brand. In Western Union's case, it has been Amazon.

"After our acquisition was denied by the government, we wanted to partner with Ant Financial to execute the movement of money around the Asian market," MoneyGram CEO Alex Holmes said during the company's 2018 fourth-quarter earnings call in February. "Our launch with Alipay is live, and they have leading providers partnering with them and we feel we can help facilitate the fund flows through the various wallets in their market."
Getting under the hood
Alipay displayed on a Verifone terminal
Signage for Ant Financial Services Group's Alipay service, an affiliate of Alibaba Group Holding Ltd., is displayed on a payment machine inside a Sa Sa International Holdings Ltd. store in Hong Kong, China, on Tuesday, Nov. 1, 2016. The urgency to prepare regulatory environments for fintech is growing as banks begin offering digital services such as biometric authentication and as mobile-payment systems such as Apple Pay and AliPay are introduced around the region. Photographer: Anthony Kwan/Bloomberg
Ant's many deals with U.S. merchants wouldn't be possible without its partnerships with First Data and Verifone.

Alipay's 2016 arrangement with First Data and its Clover Mini terminal, and Verifone's e355 mPOS device, marked the first time the Chinese payments scheme would be available in the U.S.

In Europe, Alipay signed similar deals with Ingenico, Wirecard and Zapper to put its mobile app into high street shopping terminals. Alipay also has partnerships with banks in Japan and Korea enabling Chinese tourists to shop at popular locations using the app and in India, Alipay works with Paytm.
Making friends with local mobile wallets
Alipay mobile app
The login page for Ant Financial Services Group's Alipay application, an affiliate of Alibaba Group Holding Ltd., is displayed on an Apple Inc. iPhone in an arranged photograph taken in Hong Kong, China, on Wednesday, July 26, 2017. Alibaba is scheduled to release second-quarter earnings figures on Aug 10. Photographer: Anthony Kwan/Bloomberg
Vipps International, a Norway-based payments service operated by a coalition of more than 100 Norwegian banks, announced in December that it would collaborate with China’s Alipay mobile wallet in a partnership to capture more payments from Chinese tourists.

The integration will also enable consumers in the Nordic region to use their bank apps at Alipay-enabled merchants.

Vipps will enable Alipay acceptance at merchants immediately beginning in the Bergen, Norway, which is one of the country’s top destinations for visitors from China.

As part of its alliance with Alipay, users of Vipps’ mobile app will also be able to use Alipay’s QR code to make payments at any merchants that support Alipay.

Finland’s ePassi, a mobile payments technology provider with 800,000 users that already supports Alipay acceptance, also will enable its domestic users to pay using Alipay at merchants that accept its QR code.
Going mainstream
walgreens
Walgreens Boots Alliance Inc. signage is displayed in the window of a store in downtown Chicago, Illinois, U.S., on Tuesday, Oct. 18, 2016. Walgreens Boots Alliance Inc. is scheduled to release earnings figures on October 20. Photographer: Christopher Dilts/Bloomberg
Ant Finanical's pact with Walgreens, announced in February, is a clear sign of Alipay extending its reach beyond stores that cater primarily to Chinese tourists.

The move builds on an existing connection Deerfield, Ill.-based Walgreens has with Ant’s affiliated Alibaba e-commerce site, where the drugstore chain sells online to Chinese consumers.

“This is a key strategic partnership for achieving awareness in the U.S. as Walgreens is one of the country’s largest drugstore chains,” said Yulei Wang, general manager for Alipay North America, in a press release.
Building bridges with blockchain
Alipay at the counter
Signs for Ant Financial Services Group's Alipay, an affiliate of Alibaba Group Holding Ltd., center top and center bottom, and Tencent Holdings Ltd.'s WeChat Pay, right, are displayed at a Takeya Co. Ueno Select shop in Tokyo, Japan, on Saturday, Dec. 9, 2017. Ant Financial and its strategic partners outside China should be able to nearly double users of their payments systems in coming years, Ant's overseas operations president Douglas Feagin said on Nov. 14. Photographer: Shiho Fukada/Bloomberg
Ant Financial’s Alipay is deploying blockchain technology to power a cross-border remittance service for Pakistan’s Telenor Microfinance Bank (TMB) and Valyou of Malaysia.

The deal, announced in January, is designed to provide a faster, low cost method for Pakistani expatriates working in Malaysia, who send approximately US$ 1 billion annually back to their home country.

The Alipay offering claims to be Pakistan’s first blockchain-based cross-border remittance service. It is being provided to the Telenor Group, which owns and operates Telenor Microfinance Bank in Pakistan and Valyou of Malaysia. The blockchain service will make 24/7, real-time money transfers between the two countries at a competitive exchange rate with Alipay waiving transaction fees during the one-year trial period.
The end goal: Cashless travel
Alipay signage
Signage for Ant Financial Services Group's Alipay payment system, an affiliate of Alibaba Group Holding Ltd., is displayed on a store entrance in Shanghai, China, on Wednesday, Aug. 31, 2016. About 200 million consumers use Alipay at physical stores because of the ease and speed at which consumers can make purchases. Photographer: Qilai Shen/Bloomberg
All of Alipay's partnerships and deals may be leading up to something it's demonstrated recently in two countries: The idea that a tourist from China can travel to a foreign country relying only on Alipay for payments.

In conjunction with the Singapore Tourism Bureau (STB), Alipay invited six Chinese tourists in September 2018 to visit the island country to showcase the ability of a consumer to travel without using any cash, only relying on the ability to use Alipay to purchase meals, accommodations, transportation and souvenirs.

This was the second “cashless” destination stunt Alipay has conducted, with the first being in Finland in late 2017. Both the Singaporean and Finnish events were coupled with social media campaigns to highlight the acceptance network for Chinese tourists.
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