Alipay, mainland China’s biggest online and mobile payments platform, plans to kick its international expansion into high gear by extending its partnership with US payment processor First Data Corp to cover a network of more than six million retailers and 4,000 financial institutions around the world. That could potentially make Hangzhou-based Alipay the de facto mobile payments service for a majority of mainland Chinese outbound tourists, the numbers of which are forecast to hit the 200-million mark by 2020.
The broader, more ambitious scope of the recently announced alliance between Alipay and First Data was disclosed by senior executives of the two companies in separate interviews with the South China Morning Post.
“We have taken a global approach with our First Data partnership. We are both global providers and will leverage our capabilities in the appropriate regions,” said Souheil Badran, the president at Alipay North America.
First Data and Alipay, a unit of Ant Financial Services Group, jointly announced their North American partnership earlier this month, which would support mobile payments by more than four million Chinese tourists who visit the United States and Canada every year. Ant Financial is an affiliate of New York-listed e-commerce giant Alibaba Group Holding, which owns the Post.
As part of their collaboration in North America, First Data will route all Alipay transactions through the payment gateway system of Acculynk, a technology provider that it recently acquired.
“We’re now in discussions – I can’t give you specifics – about extending Alipay acceptance to First Data’s merchants in other geographies,” said Ashish Bahl, the founder and chief executive at Acculynk. “It could be Australia or Korea … Wherever [mainland] Chinese tourists have the highest density, those are the markets we’re looking to target first.”
Bahl pointed out the roll-out of First Data and Alipay’s collaboration in North America “was fully on track [to start] in the September time frame”.
A formal announcement of the global implementation of that alliance will be made “when we have a strong solution finalised” amid the different payment systems and integration involved with a global roll-out, he said.
That expansion would tap into the growing numbers of mainland Chinese who travel overseas every year. Mainland outbound tourists are predicted to reach 200 million per year by 2020, according to a study by brokerage firm CLSA.
Alipay has estimated that it already has more than 450 million global active users.
“This Alipay move is long overdue,” said Paul Haswell, a partner at international law firm Pinsent Masons. “Lots of countries’ duty free shops already accept Alipay to help [mainland] Chinese tourists spend at their stores, so [international expansion of in-store payment processing] is a natural progression.”
We have taken a global approach with our First Data partnership. We are both global providers and will leverage our capabilities in the appropriate regions. First Data, which claims to process more than 2,800 transactions per second worth US$2.2 trillion each year, will initially support Alipay transactions at clients using its Clover point-of-sale terminal.
The Alipay service provides each user with an electronic wallet, which presents a unique Quick Response (QR) code, to make secure online and offline payments.
First Data’s Clover terminals can scan these QR codes when an Alipay user pays for a purchase. A transaction is transmitted for authentication via the Acculynk gateway, which also provides the “reconciliation tools” for Alipay and First Data to complete a purchase “in just a millisecond”, according to Bahl.
Alipay’s Badran said the goal is “to have relevant ubiquity as Alipay has evolved from a digital wallet into a lifestyle enabler for Chinese consumers and travellers, who are now able to use Alipay to quickly transfer money, call a cab, book a hotel, buy movie tickets or discover nearby shops and restaurants”.
“Our regional teams will collaborate at the local level where we can leverage First Data’s global footprint,” Badran said.