Alipay Targets Japan for 'Export' of Chinese Mobile Payments

Japan, like many Asian countries, has historically been and continues to be a very cash-oriented society. Alibaba hopes that its mobile payment platform will become popular among Japanese consumers like it has in China. Ant Financial, the operator of Alipay, is planning to bring the Alipay mobile payment platform to Japan under a new brand, which will be connectable to Japanese bank accounts. It’s a sharp break in Alipay’s strategy over the last year or so. Both Alipay and WeChat Pay have made it clear that targeting Chinese tourists abroad is their international focus, as opposed to popularizing usage among North American, European, or Southeast Asian consumers. However, Alipay has set up a joint venture with Malaysia's Touch 'n Go to bring a similar service there, the joint venture will be majority owned by Touch 'n Go which is in turn majority owned by the Malaysian CIMB Group. Unlike the Alipay move into Japan, it is largely based on the existing use of Touch 'n Go payment cards now used primarily for fares and tolls. Moreover, the move does say a lot about where Ant Financial hopes to take Alipay in the future. Particularly, it appears that Ant wants Alipay to become a staple payment method outside of China and it illustrates the transformation of Alibaba from a primarily Chinese company into an increasingly internationally focused firm. It’s impossible to say whether or not Alipay will prove popular in Japan. Cash use is still heavily preferred in Japan. At the same time, Apple Pay has slowly grown in popularity because of the high ratio of Japanese consumers owning iPhones. Nonetheless, cash use was still dominant in China only a few years ago and mobile payments, including Alipay, Android Pay, and Apple Pay, could dramatically affect spending behavior in Japan like mobile payments have in China. Alipay and other payment platforms have created a sort of consumer revolution in China in the past two or three years. Cash, rather than credit or debit cards, was definitely king and it was not uncommon for car buyers to pay in full for new vehicles with bags of cash. A few years ago, Ford's vice president and president of the company’s Asia Pacific department, at the time, David Schoch, noted that 80 percent of its car sales in China are made entirely with cash. Nowadays, many Chinese retailers and shops expect customers to use Alipay or WeChat Pay, and likewise, many Chinese consumers expect to be able to use their preferred mobile payment platform wherever they go. The exponential growth of outbound Chinese tourism is a major contributing factor behind the popularization of mobile payments abroad. It is also the primary cause of the interest by foreign firms and governments in partnering with Chinese mobile payment platforms. Firms like BNP Paribas, Barclays, and the government of Monaco have all signed agreements with Alipay and this trend shows no signs of slowing down.

Alipay Targets Japan for 'Export' of Chinese Mobile Payments

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Published August 16, 2017

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Alipay Targets Japan for 'Export' of Chinese Mobile Payments