Alibaba Group’s Alipay is partnering with U.S. payment service providers to expand its mobile payment services to the United States. However, unlike other foreign entrants into the U.S. mobile payment market, Alipay wants to compete for Chinese tourist dollars rather than for domestic mobile payment users.
Alipay is continuing its efforts to become ubiquitous for Chinese consumers, whether its users are in China or enjoying vacations abroad, by partnering with First Data and Verifone in the United States. First Data and Verifone are among the leading payment technology solutions providers within the United States—and together operate approximately 35 million purchasing terminals throughout the country. Among Alibaba’s two newfound partners, Verifone operates the largest network of retailers—both in North America and throughout Europe, whereas First Data is focused on the higher end of the market—promising that the partnership will see luxury and specialty retailers in the United States beginning to accept Alipay payments.
In addition to processing mobile payments, Alipay’s new partnerships will also enable Chinese travelers to use the Alipay app in a similar fashion to how it works domestically—as a shopping portal that makes it an interesting advertising tool for merchants that accept Alipay. Through the Alipay app, Chinese tourists will be able to find nearby retailers that accept Alipay using their smartphones’ geolocation feature, and will also find discounts, coupons, and promotional materials for local brands and retailers in the United States.
By giving overseas retailers direct access to Chinese customers through their smartphones, the initiative may make it easier than ever for local retailers and niche brands to market their products and special offers directly to Chinese customers through marketing channels Chinese users are accustomed to. While serving ads to prospective Chinese tourists through Baidu or establishing a Chinese online presence on WeChat and Weibo may be worthwhile investments for larger brands and retailers, the learning curve and opaque effectiveness in generating actual sales may be off-putting to specialty stores and smaller luxury brands. Therefore, the comparative benefits of Alipay’s move into the U.S. market could prove more valuable to companies with a smaller scale of operations than it will for larger retailers that have already made considerable moves to target Chinese tourists—both in terms of accepted payment methods as well as promotional activities.
Alipay’s increased efforts in targeting Chinese customers abroad are not unique to the United States, but follow a number of recently initiated partnerships with payment service providers and large retailers in destinations frequently visited by Chinese global travelers. For instance, Alipay has teamed up with UK luxury department stores such as Harrods and Selfridges to directly target big-spending Chinese tourists. In continental Europe, it has teamed up with France-based Ingenico, as well as Germany’s Wirecard—two major payment services providers in Europe.
As Jing Daily previously reported, Alipay has also begun rolling out what it calls its “Airport of the Future” program, which aims to facilitate purchases and provide location-based information for Chinese travelers as soon as they land at their overseas destinations. The increased efforts to extend the Alipay payment ecosystem abroad may eventually allow Chinese tourists to rely entirely on mobile payments during their travels. If it lives up to its promise, it won’t only make Chinese tourists’ lives easier, but will also facilitate marketing efforts targeting this highly profitable market segment.