Alipay, the payments service used by Chinese e-commerce leader Alibaba, is planning to expand into Europe this summer. The platform will allow Chinese tourists to make payments abroad through Alipay and it will focus on the UK, France and Germany.
Alipay will also launch ‘’Local Service Platform’’ together with its payments service in Europe to enable tourists to find and use local services easily. This platform will assist its users throughout Europe by locating merchants that accept Alipay and providing related offers and reviews for restaurants and shopping centres, as well as ticket bookings and tax refunds.
Alipay’s European launch is based on its partnership with European payment processor Wirecard that was announced in December 2015. Currently, Wirecard is available for more than 120 transaction currencies and 200 international payment networks. The cooperation allows European merchants with Wirecard point-of-sale (POS) infrastructures to accept purchases made with Alipay. To process Alipay payment, merchants need to install software on their Wirecard terminal, and use a handheld scanner to scan the barcode presented by customers in their Alipay wallet.
Travelling abroad is becoming a fashion in China. According to China National Tourism Administration 120 million Chinese tourists spent $215 billion abroad in 2015, a 53% increase in expenditure compared to 2014. This ‘moving country’ formed by 120 million tourists, paves the ways of Alipay’s expansion to Europe. The payments service and customised location features will help Alipay gain adoption by bringing benefits for both Chinese travellers and European merchants.
Alipay will build mutual understanding between European merchants and Chinese customers
Alipay‘s launch in Europe will not only focus on introducing a payments service, but also developing an ecosystem beyond payments. Firstly, for Chinese tourists, Alipay‘s service will be providing a customised tour guide while they are travelling through Europe; offering bilingual map location, recommendations, and displaying reviews from other tourists. This will allow Chinese tourists to travel more efficiently and meanwhile reduce the misunderstanding due to the cultural and language differences.
Secondly, by cooperating with Alipay, European merchants will use Alipay to introduce and promote themselves directly to Chinese tourists, process their payments, and gain an advantage over their competitors.
Alipay’s commitment to enabling not just payments but also supporting features means it should be able to secure merchant support and payments adoption among Chinese tourists in Europe. European merchants will be keen to capture a greater share of Chinese tourists spending. The development also shows how mobile apps are shaping the future of payments and commerce; the mobile location, recommendation and other features are central to the Alipay proposition.
Alipay’s European expansion is still focussed on its core domestic audience
Alipay is expanding outside of Asia, whilst Apple Pay and Samsung Pay have just launched in China. However, unlike Apple and Samsung which are sparing no efforts to negotiate with Chinese domestic financial institutions to enlarge their acceptances among Chinese users, Alipay’s expansion in Europe is not to attract European users, but to increase the scale of its Chinese user base even further.
Alipay claims 400 million monthly active users in China and holds the biggest market share of mobile payments. To entrench its domestic position against new competition from Apple Pay and Samsung Pay in China, Alipay is securing its users by following them abroad. The increasing trend of Chinese tourists travelling abroad drives Alipay to continually take advantage of knowing how to satisfy its domestic users by extending service availability and improving information customisation. Hence, through building customer loyalty and volume, Alipay will be able to increase its adoption among 120 million Chinese tourists.
Nevertheless, given that Apple Pay and Samsung Pay are learning the market from their operations in China, Alipay might consider extending its international acceptance, based on what they will learn from European market.