App has gone beyond online payments into uncharted e-waters

Editor's note: Ancient China was known for its "Four Great Inventions" - compass, gunpowder, papermaking and printing - that enabled human progress and symbolized the nation's mastery of science and technology. That spirit of innovation continues to define China, according to Beijing Foreign Studies University, which in May surveyed expatriates from and Road initiative. They said the "Four Great Inventions" of 21st century China are Alipay (the mobile payment service of Alibaba), high-speed railways, the bike-sharing business and e-commerce.

Late-mover advantage, or how innovative newcomers outperform pioneers, is what propelled Alipay toward the pinnacle of mobile payments and related digital services in China. Now, Alipay is expanding globally, an unfolding saga of success breeding more success.

At the turn of the 21st century, China had no entrenched credit card culture. Smaller online businesses with relatively low sales volume were unable or unwilling to accept credit card payments, due to high transaction fees. It was too costly to build their own fraud-proof e-checkout systems.

To address this dilemma, Alibaba, whose online marketplace Taobao was growing rapidly, launched Alipay in 2004. It designed Alipay to be like Paypal-like, an online payment tool and escrow provider.

Today, people see it as the avantgarde in mobile payments. But Alipay has gone beyond online payments into uncharted e-waters. For 450 million users, the Alipay app is a gateway to a wide array of functions, from options to buy wealth management products to booking medical services.

More than a decade after its founding in 1999, Alibaba established a financial affiliate, Ant Financial, to consolidate all such e-services under one roof. Users can connect to Yu'Ebao, the first internet-based money market fund, which helps them to earn higher yields on their idle cash. It is considered to be more convenient than banks.

Alipay also evaluates customers' shopping and spending habits to figure out their creditworthiness. Consumption patterns captured by Alipay translate into "Sesame Credit" scores, which offer certain benefits to consumers, like deposit-free services on bike rentals or skipping long lines at the hospital.

Alipay is now an internet-based finance major, a one-stop portal for all types of payment solutions, says Ni Xingjun, vice-head of Alipay. "From scanning QR codes to accessing bank loans, we see ourselves in the driver's seat in payment and financial services."

The app is ranked as the top third-party payment provider, with about 55 percent of domestic market share, followed by WeChat Pay's 37 percent, according to iResearch.

Li Chao, a senior analyst at iResearch, says Alipay is a good choice to make big-ticket purchases and for asset management services.

One of Alipay's latest endeavors is a pathway to its sister app Ant Fortune, on which third-party financial institutions can set up virtual shops and post content to draw customers. The pathway is another sign that Alipay is seeking supremacy in the burgeoning online finance sector.

Civic services have also gone virtual, thanks to Alipay. For Chinese people, traffic fines, remote medical diagnoses, marriage pre-registrations, income tax filings, doctor appointments and utility bill payments now require no more than a tap or a code scan on Alipay.

Zhejiang, among the wealthiest provinces, is home to Alipay. It is keen to embrace digital channels so that customers do not have to run an errand "more than once", says Chen Guangsheng, the provincial government's vice-secretary-general.

Customers can access the platform via Alipay. Combining location-based services with the payment function, Alipay guides users through its "City Service", which aggregates civic affairs, and redirects them to respective online pages to fill out information and make e-payments.

Alipay is rapidly expanding overseas as a growing number of shoppinghappy middle-class Chinese travel abroad to snap up products from luxury bags to high-end watches.

The payment tool is accepted at more than 120,000 merchants, including high-end stores such as Harrods and Printemps, both magnets for Chinese consumers.

To serve wealthier Chinese buyers, Alipay introduced its payment services at 10 major international airports in Germany, Japan and New Zealand. Departure tax refunds processed by Alipay were also made available in 23 countries.

Alipay also signed a deal in May with US payment processing firm First Data that will allow its service to be used at points-of-sale of more than 4 million retail partners in the United States.

Also in May, Carnival Corp's first and largest brand in China, Costa Cruises, said it will give passengers the option to use their Alipay accounts as a payment method for cabin folios.

All onboard spending, including shopping, leisure activities, excursions, food and drinks, will be added to each guest's cabin folio when the purchase is made, and then cleared on a nightly basis via their Alipay account.

The company has a vision to serve 2 billion global customers in the next decade, with more than 60 percent of users from outside the Chinese mainland, according to Douglas Feagin, senior vice-president of Ant Financial.

hewei@chinadaily.com.cn