How Alipay uses data to power its growth
China’s Alipay has rapidly expanded its global reach by building acceptance at merchants in Chinese tourist meccas around the world, but data also plays a surprisingly big role in the mobile wallet’s growth, according to Souheil Badran, president of Alipay North America, an affiliate of Ant Financial.
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 Tuesday keynote speech at SourceMedia’s PayThink conference in Phoenix.
“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.
Payments flowing through Alipay also generate data about users’ creditworthiness, giving frequent users an advantage.
“It works something like an internal FICO score. So at some hotels, Alipay users with a good score may not need to leave a deposit, increasing their convenience,” Badran said. Alipay doesn’t share consumers' individual credit data with third parties, he noted.
Since launching in 2004 by targeting the emerging middle class—many from rural areas where financial services were lacking—Alipay has been on a fast growth path and now reaches 520 million China-based users. The base is about two-thirds female, mostly in their 20s and 30s, who generate about 120 million trips a year to Asia, Europe and North America, Badran said. “Our objective is to continue to grow, and we’d love to hit 2 billion users within the next seven or eight years.”
Building merchant acceptance outside of China through tourism channels is currently a big focus for Alipay. Working directly with payments providers including First Data, Verifone and Ingenico, Alipay has built connections to hundreds of North American merchants, but Badran reiterated that Alipay isn't trying to compete with existing payments providers in markets like North America.
“The last thing we want to do is go up against mobile wallets in mature markets like the U.S.,” he said.
However, in emerging markets like India, Alipay wants to become a mainstream payment provider, and it’s doing so via partnerships. Alipay’s recent 40% investment in Paytm has enabled the China-based mobile wallet to reach 15 million consumers on Paytm’s platform, Badran said.
Remittances also are a big focus for Alipay’s future growth, which is why Ant, an affiliated company, is working to acquire MoneyGram.
“We view remittances as a very important factor for Alipay, enabling users to transfer money not just to large corridors like Mexico and India, but to smaller corridors as well, like Thailand to Hong Kong, which is why (we’re hoping to) leverage the bank relationships and locations MoneyGram has,” Badran said. “But the deal is not closed yet, so I’ll stop there.”