Alipay E-Wallet is an APP that is available on both IOS (Apple) and Android systems that provides services in mobile payments (m-payments). China is playing a leading role in the global FinTech industry, especially in m-payments/digital payments (Choi & Sun, 2016). As it is said by Heggestuen (2014) and Bushell-Embling (2018), Alipay is now among the top m-payment providers in the world, and even at the trend to take over PayPal. As one of the top third-party providers of m-payments, Alipay is chosen in this essay for its big success in China (Huang, 2019). According to McSheaffrey et al. (2019), a survey from iResearch Group in 2018 suggests that the market share of Alipay in m-payments is 54.3%.
Huang et al. (2020) said m-payments might help to renew ecosystem of financial firms, but it might still bring risks in data privacy and hence challenges to regulators. Hence, under the topic of digital rights, this essay will discuss how m-payments of Alipay might help to mobilise socio-economic change as people are adopting new payment habits and stepping into a cashless society. Meanwhile, this essay will talk about how m-payments might bring risks/challenges to data privacy, if personal data are under government surveillance after the introduction of Cybersecurity Laws in 2016 (Monshipouri, 2017).
2. ALIPAY: HISTORY AND INTERNET ECOSYSTEM
Being controlled by Alibaba Group, Alipay E-Wallet is an Internet APP that was launched by Jack Ma in 2004 in Hangzhou, China. It provides financial services such as m-payments to its users, making payment process convenient and quick (Zhang & Yang, 2020).
As it is said by Lu (2018), at the beginning of its establishment in 2004, Alipay was just an online built-in tool that helps shoppers to make a purchase on an online shopping platform, namely Taobao. It is only until 2011 that Alipay introduced its offline payment services, where users can just download an APP from IOS or Android to their smartphones to make easy in-store payments everywhere, ranging from supermarkets to small vendors.
Picture showing that Alipay users scan QR Codes at check-out desks to pay
To assist offline purchase, Alipay adopted a new technology, namely QR Code, to helps its users to pay for everything, including but not limited to metro tickets, shared bicycles, water, electricity, or coal bills, etc. Different from Near Field Communication (NFC) that was adopted by Apple Pay, QR Code is convenient and cost-effective. For example, small retailers can just print their QR Code at check-out desks, then shoppers can easily scan and pay. This means small shops even do not need to make investments in barcode guns to collect money. Hence, Alipay becomes popular among small-store owners. For further growth, in 2013, Alipay introduced some investment features, such as Yu’E Bao, to its APP, helping users to earn money with their extra savings.
Picture showing that Alipay users can make payments with facial recognition
As it is reported by Russell (2017), another turning point of Alipay’s history is the year of 2017, when it launched a new service called “Smile-to-Pay”, where users can make a purchase with facial recognition i.e. no smartphone is required. This service was first introduced in Freshippo (Hema), a supermarket under the control of Alibaba Group, and also among other supermarkets and restaurants in partnership with Alibaba, such as KFC and Carrefour. In order to use this service, shoppers only need to register an account in Alipay, where facial recognition service is enabled. Then, at the check-out desks, a machine will scan the face of the shopper, where they should type a registered phone number for security reasons, and then quick check-out finished. As in the view of Anon (2014), identification using biometric information is always the focus of Alipay.
Now the services that Alipay provide include m-payments (QR Code, facial recognition), wealth management (Yu’E Bao), and credit reference (Sesame/Zhima Credit) (Lu, 2018). This enables its users to transfer money from banks to Alipay, to make an easy payment, and manage wealth and credit.
According to Zhong & Nieminen (2015) and Guo & Bouwman (2016), an ecosystem includes the competition and cooperation of organizations that are with inter-connection and inter-dependence. Alipay creates an Internet ecosystem, in which Alipay is in partnership with large organizations such as KFC and Carrefour, while as the same time incorporates a large number of small vendors and retailers as users (Huang, 2019). Due to its convenience and low-cost, Alipay now has enormous users, including millions of small shops (Lu, 2018). In fact, Alipay intends to expand its user base from urban to rural regions, covering all walks of like and even in remote areas of China. It is easy to observe that even in small towns of China, street vendors are using Alipay to collect money.
The main competitor of Alipay is WeChat Pay, and the two companies occupy more than 90% of the market share in China (Li et al., 2019). The major regulators are People’s Bank of China (PBC), and other financial regulators, such as China Securities Regulatory Commission for fund management, and also authorities who are responsible for the Cybersecurity Laws (2016). Below is an Internet ecosystem of Alipay.
INTERNET ECOSYSTEM OF ALIPAY
3. ALIPAY: INTERNET TRANSFORMATION
3.1 HOW ALIPAY MOBILIZE SOCIAL CHANGE?
NEW PAYMENT HABITS: A NEW QR CODE CULTURE
The first social/cultural change that Alipay brings is a QR Code culture, which is a different payment habit. Thanks to the FinTech that was introduced by Alipay, shoppers are now stepping into a card-less society. The default payment option for shoppers is not cash or card now in China, but a one-off QR Code from their smartphones. It is hard to find any shoppers bring wallet/cash to make a purchase from supermarkets or small shops. Scanning QR Code and making payment covers all walks of lives, from breakfasts, fines, water bills, to making charity donation (Li et al., 2019). According to Huang (2019), from surveys, small business owners said that if they did not adopt m-payments, they might lose customers, as shoppers might not take cash with them. This promotes the popularity of e-payments further. Aveni & Roest (2017) said that the profound influence of Alipay in bringing social change is also reflected in its wide acceptance in rural regions, where e-wallet is widely adopted.
DIGITALIZED ‘SOCIAL MONEY’
Another social/cultural change that Alipay brings is the way that people sending out lucky money to their children during the Chinese New Year. Due to the popularity of e-wallet, digital red envelopes is becoming popular, where Alipay has introduced a new function for Chinese to send out lucky money, as it is said by Lu (2018). During other important days, such as wedding, the popularity of Alipay also affects the habits of Chinese to send out digital “social money” to their friends and relatives; in other words, the rituals to give gifts physically using red envelopes, is now becoming digital (McDonald, 2020).
BEAUTY-CHASING CULTURE OF WOMEN
Another social/cultural change that Alipay brings is the beauty-chasing culture for women. As female users complained that their faces look “ugly” when scanning from face-payment system, Alipay added a new “beautifying filters” function in 2019, as The Guardian (2019) reported. This update is in line with the chasing beauty culture in China, after the popularity of Meitu since 2016, an App to beautify face, as it is said by Yeung (2019). This fits into habits of Chinese women in controlling their appearance, as Alipay used technology to control how women’s face and body are presented on the screen (Peng, 2020).
3.2 HOW ALIPAY TRIGGERS REGULATORY PROCESSES?
CONTROLLING OF FINANCIAL RISKS
The first new regulatory process that Alipay triggers is on controlling financial risks. As the user base of Alipay grows, an increasing number of people are transferring their money from banks to Alipay accounts. This is because Alipay introduced a wealth management program Yu’E Bao, that allows its users to transfers their money to money-market funds, that is easy to be withdrawn like currencies, but with an annual rate of 4-7%, which is higher than traditional banks (Zhang & Yang, 2020). Hence, millions of people treated Alipay as the default option to save money, as it is reported by Lu (2018). However, these users do not realize that savings on Alipay will not be protected by National Deposit Insurance Scheme, that is provided by traditional banks, as Lu (2018) said. Hence, putting too much money on Alipay might bring additional financial risks to its users. Thus, China Nets Union Clearing Corporation was established, so that the operation and financial risks of all m-payments, including Alipay, are under the control of People’s Bank of China, as it is reported by Lu (2018).
DIGITAL RIGHTS: PERSONAL DATA PRIVACY OR GOVERNMENT SURVEILLANCE?
Another regulatory process that is triggered by Alipay is personal data privacy. As Alipay users scan their face to pay, many of their personal data are stored by the firm, such as the tracking of locations, shopping habits, friends’ circles (Huang, 2019). Thanks to the technology of big data, the company can gather and utilize all personal data of their users. This triggers regulatory process for the protection of personal data.
As a milestone in protecting personal data, the Cybersecurity Law was introduced in 2016 (Feng, 2019). This is the first related cybersecurity regulations in China that intend to fit into the global standards to prevent misbehaviours online. However, it is of concern that personal data collected might be under government surveillance, as this law does not define the right to get personal data (Feng, 2019). For example, Varley-Winter & Institute (2020) said that the facial recognition that is collected from Alipay might be used by governments for political tracking. This is why people might wear a mask in any protest activities. Chong (2019) said that, in the surveys, Chinese users of Alipay thinks that their personal data on Alipay might be shared with the state. Monshipouri (2017, p. 123) quoted the views from Valeriano & Maness (2015, p. 24) to asset that “the cyber-domain is no different from the conventional frame of politics”. All these reveal that there are still concerns on whether personal privacy might be sacrificed in the name of national security, if personal data on Alipay are used for political reasons, in case that there is a lack of regulations to protect personal data.
Hence, there is a question on how to make a balance between personal data security/digital rights and national security/government surveillance. The cybersecurity regulations are still under a long way to go if there is too much power from the governments (Monshipouri, 2017). Furthermore, Alipay might trigger the development of other laws. For example, some regulations might be required to define the way that youths use Credit Payment, as many young people might not even have jobs to pay for their advanced purchase, but everyone who has personal identification (above 16) can open up their Credit Pay on Alipay, as it is reported by Yang et al. (2020).
Alipay is discussed in this essay for its relative success in China’s m-payment industry, with millions of users. By incorporating as many users as possible, ranging from small shops, e-business owners, vendors, to enormous shoppers, Alipay now has market share of more than 50% in China. Due to its popularity, Alipay mobilizes social change in creating a cash-free QR Code payment habit in China. It has largely changed the shopping habits of Chinese people. Also, people are changing their social habits in sending out “social money” digitally. Furthermore, Alipay also fits into the culture of chasing beauty of women in China by adopting a “beautifying filters” function. The habits of people in transferring savings from banks to Yu’E Bao triggers the establishment of China Nets Union Clearing Corporation to control financial risks. However, there is still concerns on the protection of personal data privacy, although the Cybersecurity Laws was introduced in 2016, there are still concerns on government surveillance on Alipay’s big data of users, especially of facial recognition, movements in locations, as governments might use this data for political tracking or other purposes such as ethnic profiling.
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