Alipay Is in the US, but Not to Vie Against Apple Pay (Yet)

Alipay, China’s top payment app, targets Chinese tourists 

Author: Andria Cheng

April 21, 2017

Alipay, China’s top mobile payment service by transaction amount, has now expanded to the US. With 450 million users worldwide, Alibaba-affiliate Alipay now wants to cater to the growing number of Chinese visitors to the country. 

In an exclusive interview, Souheil Badran, newly appointed president of Alipay North America, spoke to eMarketer about the service’s US growth plan and Alipay parent Ant Financial’s plan to buy US money-transfer service MoneyGram.

eMarketer: Alipay has been expanding aggressively overseas, largely in other Asian markets. Why expand into North America now?

Souheil Badran: We started about three or four years ago to expand the ability for Alipay consumers to pay outside of China. Over the last couple of years, we looked at it a little bit differently and started following the Chinese tourist. We asked, there are about 120 million [Chinese travelers] worldwide every year. Where are they going? How are they spending?

So we kicked off the initiative here in the US, working with point-of-sale terminal providers like First Data and Verifone in getting built into their ecosystem. That means if I am a Chinese consumer coming to the United States, I will pay with a QR code, no differently than how I would pay at a retailer in China.

eMarketer: What’s your top focus on the retail front?

Badran: We focus on restaurants, retailers, high-end luxury goods and travel [partners]. From a geographic perspective, we look at where the Chinese consumer is going. So we focus our efforts on [popular Chinese travel destinations] like New York, Chicago, LA, San Francisco and Florida so we can start getting more usage.

eMarketer: Alipay has partnered with India’s Paytm digital wallet and South Korea’s Kakao Pay to target other Asian consumers. What’s your plan here to attract US consumers and potentially vie against Apple Pay and other US mobile wallets?

Badran: Step No. 1 is getting as many merchants as possible in the US to accept Alipay as a payment method. We’re shying away from building another payment wallet because with Apple Pay, Samsung Pay and Starbucks, there are a lot of payment apps in the US already. We’d rather focus on Chinese [travel] consumers being accepted at the point of sale, instead of coming in and saying to an American consumer here why don’t you use Alipay right now?

"The US market is very important to us. ... We had to understand the environment, the ecosystem, and the other players that are in the market." 

eMarketer: How important is the US market for you and how do you see Chinese inbound travel sustaining your growth here?

Badran: The US market is very important to us. We wanted to make sure we’re not just launching like any other payment method. We had to understand the environment, the ecosystem, and the other players that are in the market. About 3 million to 4 million Chinese consumers come to the US every year. That figure is growing at about 18% to 20% year over year. Chinese consumers are starting to travel more to the US. The other aspect of that is their travel behavior has changed.

[Editor’s note: The US Travel Association forecasts that inbound China visits to the US will nearly double to 5.7 million in 2021 from an estimated 3 million in 2016.]

eMarketer: How so?

Badran: In the past, they would buy a tour package. Now, they’re just getting the hotel and the airline [package], and they’re on their own for everything else in many instances. So we shy away from tour packages and focus more on individuals who are traveling with their families.

eMarketer: A US Travel Association study showed Chinese visitors spend more than other international travelers, averaging $7,200 per visitor in 2015. How and what are they buying here?

Badran: They’re looking for deals. They’re looking for brands. They’re looking to say, I bought this in the United States, even though some things are made in China. But we’re also starting to see them spending on experiences and adventures—whether it’s car racing or helicopter rides.

eMarketer: How are you convincing retailers here to get on your platform?

Badran: In [making Chinese consumers feel] comfortable that when they pay for something, they are seeing the actual price, and they are paying for it in their own currency. 

The other part is, within the application itself, we have a function called Discover. Think of it as a kind of Yelp that gives a Chinese consumer the ability to uncover other experiences. With this, we can drive traffic to a retailer.

What we’ve also done to entice [retailers] is that we’re bringing them [consumers] who are already validated. We’re able to extend credit to a customer [at checkout]. Merchants like that because we’re able to bring them a guaranteed transaction.

eMarketer: Do only your retail partners come up in the search function?

Badran: We are trying to be as inclusive as possible. When you look for restaurants, we’re going to show you the restaurants that are in [your search] area. But we’re going to highlight the ones that accept Alipay as partners.

eMarketer: Who are your top retail partners?

Badran: Macy’s, Bloomingdale’s, Louis Vuitton, [luxury travel duty-free chain] DFS and Hudson News are among areas of concentration. We’re focusing on what makes the most sense for the Chinese tourist coming to the US. And that’s who we’re going after. With partners like First Data and Verifone, if you’re in a taxi that has a Verifone terminal, you can use Alipay.

eMarketer: What about your restaurant partners? Are we talking about fast food chains like McDonald’s or is it also more a high-end focus?

Badran: It was surprising for me, but many Chinese tourists actually want to go out and have Chinese food. So we are going after hundreds of Chinese restaurants around the country.

eMarketer: What’s driving Ant Financial’s bid for MoneyGram?

Badran: We look at it as a market that was ready for disruption. They have coverage in hundreds of countries and 350,000 agent locations where people can come in and take money out. We ask, is that something that we can leverage as we continue to drive our wallet experience? Instead of going into a MoneyGram and picking up your money then going out and spending it, if you put it in our wallet, you can use that money to pay bills or to transfer money to family and friends.

You may be unbanked or under banked. [With Alipay] users can accept payments, build credit and save money. They don’t need a bank location to be close to them anymore. At some point, we would be able to offer similar services here in the US to the population that MoneyGram is serving.