Amazing Alipay: The world’s leading online mobile payment platform

What's the transformative impact of Alipay through the world?

Alipay | Accessible digital payments for everyone
Alipay | Accessible digital payments for everyone, Image: global Alipay, CC

Introduction:

In recent years, the coverage of the Alipay platform has been expanding rapidly. As a third-party payment platform, more and more countries and regions are allowed to use Alipay for payment. Alipay’s transformative impact on society and even the whole world in different fields cannot be ignored.

For the social economy, Alipay’s existence has dramatically promoted consumption level, and people no longer need to worry about not being able to pay due to lack of enough cash. As for society, Alipay has greatly improved people’s living standards and brought convenience to people’s life. In online payment, Alipay has undoubtedly created a new platform and is in a leading position.

This article will objectively analyze the transformative effect of Alipay. The first part will first introduce Alipay’s background and development history, then extend to its business field and introduce its owner and business model in detail. The following article will elaborate on Alipay’s social ecology position and reasonably analyze its partners, business rivals, and other information.

Besides, this paper will also analyze how Alipay has changed people’s understanding of the Internet and carried out innovation and development. Finally, it is worth discussing topics about how did Alipay positively change people’s lives and make today’s achievements in the internet market.

What is Alipay?

 

Figure 1: The video of “What is Alipay,” Source: YouTube

Alipay is the most representative mobile payment platform in the history of the Internet, which has brought different degrees of convenience to people’s lives and society’s economic development. Simultaneously, Alipay has well developed its mobile payment service, allowing people to pay online and make payments by scanning QR codes. More and more people can go shopping with only a mobile phone and pay easily by scanning a code or transferring money, instead of worrying about losing their wallet or not carrying enough cash.

Besides, with Alipay’s development in recent years, it has created the function of “Ant credit pay,” which allows people to advance a sum of money for spending and return it after they get their salary next month. This technology enables the fastest and most convenient way to advance money and boosts consumers’ purchasing power.

 

Image: Screenshot of the rise of China's Mobile Payment from Google

Figure 2: Screenshot of the Rise of China’s Mobile Payment, Source: Google

 

 

The History of Alipay: From Hangzhou to the global market

Before introducing Alipay, we have to mention a unique internet payment method: mobile payment. Mobile payment is a form of payment by a non-financial entity that allows people to make payments over the internet (Liu, 2015). Alipay is the representative of mobile payment technology. In Hangzhou, China, Alipay was founded in February 2004 by the Alibaba Group (Zhu et al., 2017).

But in 2004, Alipay was unable to offer mobile payment services because it started as an electronic payment system that supported buyers and sellers on Taobao, an online shopping platform. When Alipay gradually developed into a mobile payment service, its reliability in China was established, and its registered users reached 700 million (Chew et al., 2020). Therefore, society can not ignore Alipay in the history of mobile payment from now on.

 

How does it have a transformative effect?

In the early days, when users have not widely adopted mobile payment as a new service, Alipay did not have a great influence (Dahlberg et al., 2008). However, as more and more people begin to adopt this new technology, the majority of people in society gradually start to trust and use Alipay. Of course, this technology will not be limited to the Chinese market. With the increase of Chinese tourists, Alipay has started to accepted by many countries worldwide to attract more tourists and boost their economy, so Alipay has begun to develop from China to the global stage.

 

Alipay’s owner & business model

Alipay is an independent third-party payment platform under the Alibaba group founded by Jack Ma and has long cooperated with its other businesses (Taobao, T-mall). The business operation mode used by Alipay is the “third-party guarantee transaction mode,” which can also be said that it is a virtual electronic currency trading platform that realizes the transfer of account funds through specific Banks.

 

  • Early online operation: Alipay was first operated on Taobao. We can also call this business model “Take root.” Taobao Merchants pay Alibaba for advertising and other services to stand out from the crowd and get more customers (Osawa, 2014), then Alipay can earn fees for advertising and other services.
  • Third-party services: With the development of Alipay, it has now become an independent third-party platform. For example, Alipay cooperates with some business websites to offer fast online payment of utilities or quick purchase of train tickets, to reach cooperation with business websites and make profits.
  • Offline barcode payment mode: Alipay users and merchants scan the barcode for payment and collection, and use the remote payment to simulate near-field payment. As a result, people no longer need to use bank cards for consumption, promoting offline payment development.
  • Rapid lending model: To buy the desired products at discounts, users can ask for loans from Alipay in case of insufficient funds. They can then receive the money immediately, without going to the bank for borrowing procedures. But if users fail to repay the money on time, Alipay will charge a certain amount of interest and make a profit.

 

The social status of Alipay:

Social-ecological status:  

Alipay is still a prevalent online payment platform in the world. Ubiquity is one of the main advantages of mobile payment, which means users can access mobile payment services anytime and anywhere (Varshney and Vetter, 2002). With Alipay’s increasingly rich content and services, many industries and fields have begun to use it and improve its social status.

Cooperative partner:

As an industry under Alibaba, Alipay has many partners in shopping or social networking platforms owned by Alibaba. But beyond that, there is a cooperation between Alipay and companies in other industries, such as McDonald’s and KFC in the food industry, famous hospitals in the medical field, and App Store and Apple Music in the media market.

 

Figure 3: WeChat Pay VS Alipay. Source: YouTube.

 

Competitors:

While Alipay may represent the mobile payment space on the Internet, that doesn’t mean it doesn’t have competitors. In recent years, WeChat payment has formed a strong competitive trend with Alipay and has gradually become Alipay’s biggest competitor. At present, in the scale of mobile payment transactions, Alipay is stronger than WeChat, and on the scale of users, WeChat is stronger than Alipay (Li et al., 2019).

Users only make decisions and choices based on experience and results, so if users perceived that the risks of using Alipay are higher, they will hold a negative attitude using Alipay (Li et al., 2019). And this will form the inevitable competition between Alipay and WeChat.

 

Serve & be served:

As a payment platform with a mature operation mode, Alipay has a complete supervision system, ensuring users’ daily privacy and safety. Moreover, Alipay’s users span the globe, from Taobao merchants to tourism and hydropower sites to hospitals and airlines.

 

Alipay’s ecosystem

Figure 4: The ecosystem of Alipay, Created by Yingying Liu.

 

Social & Political transformation

Figure 5: TRENDS OF MOBILE PAYMENTS, Source: Google.

As a basic transaction service, mobile payment has a low penetration rate among users (38.9%) but has always been highly valued by enterprises (Zhou, 2015). Therefore, with the continuous research of these enterprises and Alipay’s rapid development, some enterprise products such as “Alipay wallet” began to be widely accepted. More and more people joined the ranks of using online mobile payment. Looking at the current social situation, the phenomenon of using Alipay to make a payment has become more common, which represents that people have begun to adapt to the application of this new network culture.

From the perspective of international politics, Alipay’s emergence and development have made the relationship between China and the rest of the world more positive. For example, when a country’s tourist areas start to use Alipay’s payment collection model, it will attract a large number of Chinese tourists to spend money. Tourists no longer need to go through complicated procedures to exchange foreign currency. Instead, they can do shopping through a simple operation on Alipay, which can achieve economic growth in the tourism industry and promote diplomatic relations and get a win-win situation.

 

New regulatory model

Figure 6: Alibaba Penalized List. Source: Alibaba.com
Figure 6: Alibaba Penalized List. Source: Alibaba.com

Alipay’s services have brought great convenience to people’s shopping and daily life. Online retail offers consumers a more comprehensive selection of goods at lower prices and creates potential channels for illegal activities (Yan et al., 2011). As a result, the supervision of network security has become an important part.

However, Alipay’s supervision mode is different from that of common social media platforms. It needs to pay more attention to the identity information of users and the security of bank accounts. Alipay stipulates that one ID card can only be tied to one account, which use to prevent malicious competition to the greatest extent and avoid criminal gangs to conduct financial crimes such as swiping or money laundering through Alipay.

 

How is it innovative?

Mobile payment is not the only payment method, and the reason why Alipay can achieve today’s achievement is that it is an innovative service model. Alipay focuses on micro-payments, while banks mainly rely on macro-payments to generate profits, so Alipay will not directly compete with banks but can reach a partnership (Guo & Bouwman, 2016).

Moreover, rather than limiting its services in China, Alipay are always committed to delivering its services to the world. The service fields and regions covered by Alipay are also increasing year by year. Its services have gradually expanded from the initial shopping websites to medical, tourism, aviation, education, and other fields. It has been continuously innovating in technology and services to attract more users around the world.

 

Figure 7: Alipay’s expansion plans. Source: YouTube.

 

Conclusion:

According to the business market and society, Mobile payment services not only bring considerable benefits to service providers but also improve the convenience for consumers (Lerner, 2013). As the most popular presence in today’s online mobile payment market, Alipay can represent the internet’s transformation. It makes the internet no longer limited to social interaction and communication but brings more innovation and possibilities.

Having the service of Alipay means more convenience for people’s life. People no longer need to worry about insecurity or easy loss of cash. They can also use the Alipay platform to realize faster lending services and obtain loans instantly. The emergence of Alipay also means more job demands and opportunities. For example, maintaining and monitoring the platform, conducting research and development, and innovation requires a significant staffing allocation, which all alleviates the growth of society’s unemployment rate.

Besides, Alipay has greatly promoted the development of the global tourism industry. Tourists no longer need to spend a long time applying for money exchange services at Banks, and merchants will get more customers from all over the world to travel or spend money because of Alipay’s convenience service.

 

 

 

 

References:

Chew, B., Shen, X. & Ansell, J. (2020). Alipay entered Malaysia: a closer look at the new market entry strategy driven by Chinese tourists. Qualitative Research in Financial Markets, 12(4), 561–577. https://doi.org/10.1108/QRFM-06-2019-0069

Dahlberg, T., Mallat, N., Ondrus, J., Zmijewska, A. (2008) Past, present, and future of mobile payments research: A literature review. Electronic Commerce Research and Applications 7(2): 165–181.

Guo, J. & Bouwman, H. (2016) An ecosystem view on third party mobile payment providers: a case study of Alipay wallet. Info: The Journal of Policy, Regulation and Strategy for Telecommunications, Information and Media, 18(5), 56–78. https://doi.org/10.1108/info-01-2016-0003

Liu, Y. (2015). Consumer protection in mobile payments in China: A critical analysis of Alipay’s service agreement. The Computer Law and Security Report, 31(5), 679–688. https://doi.org/10.1016/j.clsr.2015.05.009

Li, J., Wang, J., Wangh, S., Zhou, Y. (2019). Mobile Payment With Alipay: An Application of Extended Technology Acceptance Model. IEEE Access, 7, 50380–50387. https://doi.org/10.1109/ACCESS.2019.2902905

Lerner T. (2013) International Comparisons. In: Mobile Payment. Springer Vieweg, Wiesbaden. https://doi-org.ezproxy2.library.usyd.edu.au/10.1007/978-3-658-03251-7_7

Osawa, J. (2014). How to understand Alibaba’s business model. Dow Jones Institutional News, Retrieved from http://ezproxy.library.usyd.edu.au/login?url=https://www-proquest-com.ezproxy1.library.usyd.edu.au/docview/2080597796?accountid=14757

Varshney, U, Vetter, R., (2002), Mobile Commerce: Framework, Applications and Networking Support. Mobile Networks and Applications, 7(3), 185–198. https://doi.org/10.1023/A:1014570512129

Yan, L., Ai, L. and Tang, J. (2011). Risk-based AML regulation on internet payment services in China. Journal of Money Laundering Control, 14(1), 93–101. https://doi.org/10.1108/13685201111098905

Zhu, D. H., Lan, L. Y., & Chang, Y. P. (2017). Understanding the Intention to Continue Use of a Mobile Payment Provider: An Examination of Alipay Wallet in China. International Journal of Business and Information, 12(4), 369–390. https://doi.org/10.6702/ijbi.2017.12.4.2

Zhou, T. (2015). An Empirical Examination of Users’ Switch from Online Payment to Mobile Payment. International Journal of Technology and Human Interaction, 11(1), 55–66. https://doi.org/10.4018/ijthi.2015010104