Alipay, just pay it: Payment New Generation

Picture showing how to scan QR code, Breuninger in Dusseldorf, Germany on June 29, 2018. Photo: Xinhua


Nowadays, with the rapid development of e-commerce, Alipay, a third-party payment platform, has become a safe, convenient and universal payment means. Relying on the computer network technology, payment transaction through the computer network transmission data, carries on the digital data transmission, completes the virtual information currency transfer with the credit of the financial service institution. The development of third-party payment is gradually transforming the financial industry into new Internet finance (Yue, 2015), while the influence and transformation of third-party payment platform on traditional finance is more irreversible than that of other industries.

The first part of this essay will outline the operation of Alipay, and the second part will examine the historical development and the latest process of the company. Alipay’s business model and Internet ecosystem will also be illustrated. Finally, we will explore the transformational Internet changes and possible problems brought by Alipay.

What is Alipay?

Alipay was formally established in December 2014 and is also a subsidiary of Alibaba Group. Through cooperation with financial service institutions, Alipay serves real-name users with the service concept of “convenience, speediness and safety”. After the advent of Alipay, most of the problems in the network transaction were solved. Alipay used the third-party transaction model and designed the first QR-code payment method and applied for a patent (Stacey, 2006). Alipay emerged to solve the problem of e-commerce guaranteed transactions in the subsequent development. Its service business fits people’s life and consumption psychology. Thus, it has come into the public’s attention and now it is ahead of other third-party payment platforms.

All right reserved: Xinhua

The development of Alipay

 Alipay was incorporated in the British Cayman Islands in 2004, jointly owned by Yahoo, SoftBank and Jack Ma. In 2010, Alibaba incorporated Alipay as a wholly owned subsidiary (China Telecom, 2011). In the same year, regulations on payment services of non-financial institutions were issued, and third-party payment institutions were formally brought into the regulatory scope. Since 2015, China has successively introduced the bank card swiping fee pricing mechanism, non-bank payment institutions’ online payment business management regulations, QR-code payment business norms and other policies, which have gradually strengthened the supervision of Alipay’s management (Yue, 2015). In addition. The strategic goal of Alipay is to focus on online payment application services, with the service concept of fast, safe and convenient, to provide a reputable and reliable payment platform for the vast user base. With the development of science and technology in recent years, face scanning payment is a new payment method with AI face recognition as the core. The Facial payment system was launched by The Finnish startup Uniqul for the first time in July 2013. Jack Ma’s face scanning payment demonstration at the Hanover Conference in Germany in 2015 really put the technology to the table. In 2018, Alipay introduced a face scanning payment device and began to put it into commercial use.

The busines model

Alipay has two general modes, namely offline code scanning and online payment.

The construction of Alipay scan code payment mode no longer carry cash when people go shopping. This can effectively prevent the consequences of cash loss and theft due to people’s negligence. Alipay scanning code payment mode construction, the speed to the account is very fast, to the account immediately. This rapid speed of payment far more than the traditional way of bank transfer. Mobile payment has become the new habit of citizens’ consumption. No cash, no card, a mobile phone can meet consumer demand. Data shows that in the past five years, the size of mobile payment transactions in China has increased by 33 times. In 2018 alone, it exceeded 200 trillion yuan, ranking first in the world (Abul & Yukun, 2019).

Online payment is a service in which payment is preserved by Alipay for both customers and merchants. Pay treasure to guarantee service process: first, the customer and business at home after selected products online, get in touch and reach an agreement at this time the customer put the money to pay treasure to pay treasure as the middle on the escrow account immediately notify the merchants have received money to delivery, to customers after receiving the confirm the delivery of products and click, pay treasure to wire money to the merchant’s account and complete all transactions (Kim & Ferrin & Rao, 2008). Secondly, Alipay plays a third-party role in the whole process, and at the same time provides credit guarantee for both customers and merchants to ensure the normal transaction.


Alipay’s internet ecology

Alipay has now gone beyond the limits of industry, time and space. It not only plays a pivotal role in China’s third-party mobile payment market, but also surpassed PayPal in the United States to become the world’s largest third-party payment platform in 2015, achieving great success.

The core of Alipay scanning code payment mode is the account. In the whole process of transaction, no need to use cash, you can directly use Alipay scanning code payment mode to complete the payment transaction

In order to improve the convenience of Alipay scanning code payment mode, Alipay e-commerce platform provides users with a special consumption account, which is completely independent of the telecom account. Alipay users can directly complete commodity transactions through a special consumption account.

Alipay as an enterprise providing third-party payment services, users can pay by using password or QR code scanning, which greatly expands the customer base and helps individual users to realize small transactions more conveniently. Real-name authentication, easy to use. Alipay account application operation simple sheet is not cumbersome, only need their identity authentication (Yue, 2014). After applying for Alipay account, users can consume or transfer money very conveniently, and also check our consumption situation timely. Although Alipay competes with WeChat in offline payment, it has far more functions in financial management than WeChat. Take Yu ‘ebao as an example to illustrate this problem. Yu ‘ebao is a money value-added service under Alipay for financial investment users (Huosong & Zhe, 2016). Through Yu ‘ebao, users can get several times higher interest than banks, but also be able to spend and transfer money as they want. Meanwhile, consumers can directly buy financial products such as funds on the Alipay website, which is a one-stop service that greatly improves the loyalty of users (Chuah & Philipp. et al,2016). Alipay has the most solid partner – Taobao, this partner resources are also other enterprises can hardly match its. Alipay was originally designed for Taobao to keep buyers’ money safe, but it gradually moved away from the Taobao system (Jin & LIzhen, 2014). The relationship between the two is still very close. If Taobao lacked Alipay, it would not have gained so many development opportunities, and if It did not have Taobao, Alipay would not soon appear in the market. In Alipay, a large number of users come directly from Taobao, which extends the use of Alipay to all aspects of daily life

Below is a diagram of Alipay’s internet ecology:


How has Alipay come to have such a transformative effective?

 Introduce a new type of online business model

Through the development of social media, Alipay has changed the third-party property of its “third-party payment tool”, making it more interesting and more practical, so as to better meet the entertainment and practical needs of users and consolidate its market share. In the two years from 2015 to 2016, Alipay has invested heavily in the development of social media and made great efforts in software development. Since its establishment, Alipay has launched new functions or new products almost every year (Xiaogang, Shaorui, 2017). In particular, it not only has the payment function and financial management function, but also has the life service which penetrates into the aspect of people’s life. Since 2008, Alipay has been able to pay water and electricity bills and pay by credit card without having to wait in line. Although with mobile payment, consumers only need to bind their bank cards and payment tools, and they can consume without worrying about the embarrassing situation that they forget to bring cash or cash is not enough. Face scanning is also seen as a revolution in payment methods, which can accurately identify individual users and improve their payment experience. However, there are always two sides to everything. Mobile payment can bring great convenience to people’s payment, but also can’t ignore the problem of fund security (Zimmerman, 2018), it is very convenient to use mobile phone to scan the collection code of the merchant when there is a network. However, there are still some hidden dangers in fund security, because these payments are bound to the customers’ own bank cards, some malicious people may invade users’ mobile phones through viruses or trojans, stealing users’ funds will bring serious threat to users’ property. Therefore, when considering the convenience of mobile payment, users should also consider that there are certain unsafe factors.

An example of face scanning in the supermarket. All right reserved: TechNode, Shi Jiayi

triggered new regulatory processes

In August 2019, Alipay released the Biometric User Privacy and Security Protection Initiative, calling on industry enterprises to regulate and protect user information from the perspectives of privacy protection, prevention of information abuse, responsibility and supervision (Au, 2020). It is pointed out in the initiative that enterprises should store the collected information securely to improve the security intensity and should also clarify and standardize the purpose and scope of user information to avoid excessive use of information. As a leading biometrics technology company in China (Yue, 2015), Alipay has issued this initiative, reflecting the spirit of responsibility and guiding the standardized development of the whole industry.


In conclusion, Alipay was created to solve the problem of online e-commerce guaranteed transactions. In the subsequent development, its service business fits people’s life and consumption psychology, and has come into the public’s attention. Today, Alipay is ahead of other third-party payment platforms. Creating business opportunities and constantly innovating its business model and profit model, which is a good reference for operators in other e-commerce fields. Although Alipay still has defects, these problems will be explored slowly in economic development and solved continuously through innovation.




 Chen, L. Zhang J. (2014) The Study of Internet-based Finance Service Innovation Mode and its Strategic Options in The Case of Yu’ebao. International Conference on Service Systems and Service Management (ICSSSM), 1-3. doi: 10.1109/ICSSSM.2014.6943388

 China Telecom (2011) Alibaba Group, Yahoo and SoftBank reach agreement on Alipay. Information Gatekeepers, 18(8), 3-4.

Chen, X. Li, Shao. (2017) Understanding Continuance Intention of Mobile Phone Service: An Empirical Study. The Journal of Computer Information Systems, 57 (4), 287-298. doi: 10.1080/08874417.2016.1180649

Dan, K. Donald, F. Raghav, R. (2008) A trust-based consumer decision-making model in electronic commerce: The role of trust, perceived risk, and their antecedents. Decision Support System, 44(2), 544-564.

Hannah, Z. (2018) The Data of You: Regulating Private Industry’s Collection of Biometric Information. University of Kansas Law Review, 66(3), 637-671.

Khayer, A. Bao, Y. (2019) The continuance usage intention of Alipay. The Bottom Line, 32(3) 211-229. doi:10.1108/BL-07-2019-0097

Lavender, A. (2020) China unveils stricter rules for facial recognition tech. Retrieved from

Liu, Y. (2014). User control of personal information concerning mobile-app: Notice and consent? Computer Law & Security Review, 30 (1), 521-529.

Liu, Y. (2015). Consumer protection in mobile payment in China: A critical analysis of Alipay’s service agreement. Computer Law & Security Review, 31(5), 679-688

Stephanie, C. Rauschnable, P. Marimuthu, M. Ramatah, T. Nguyen, B. (2017) Why do satisfied customers defect? A closer look at simultaneous effects of switching barriers and inducements on customer loyalty.Journal of Service Theory and Practice, 27(3), 616-641. doi: 10.1108/JSTP-05-2016-0107

Schreft, S. (2006) How and why do consumers choose their payment methods? Ideas working paper series from RePEc, Retrieved from

Xia, H. Hou, Z. (2016) Consumer use intention of online financial products: the Yuebao example. Financial Innovation, 18(2). doi: 10.1186/s40854-016-0041-x.



Jiahui Cheng
About Jiahui Cheng 4 Articles
USYD students / dealing with social media life