What is AliPay & How Does It Work?

Alipay is a digital wallet and payment app that eliminates the need for users to carry around physical currency. Alipay’s super app functionality includes ordering a taxi, applying for a credit card, and even purchasing insurance, among many other things. Offering this mode of payment is an easy choice for businesses that need to facilitate international transactions, as it already has over a billion customers.

What is Alipay?

Alipay is a payment system developed by the Alibaba Group and launched in 2004 in Hangzhou, China. Over 110 countries are represented within Alipay’s user base, including the US, Spain, Singapore, and Brazil. Alibaba boasts over 1.3 billion monthly active users as of the first quarter of 2022.

The Alipay app serves as a digital wallet on the user’s mobile device, allowing for easy and secure transfers between Alipay users. Alipay is a “super-app” with many additional functions, such as:

• Option to link credit card accounts
• Insurance-related items
• Taxi reservations

Alipay’s mobile payment service facilitates international money transfers, so sending money back to your home is simple if you’re already overseas. Instead of dealing with the hassle of sending money through traditional financial institutions, Chinese citizens may use services like Alipay to send money back home to their loved ones.

How does Alipay work?

Your debit or credit card information can be stored in the Alipay e-wallet app. This way, you can discard the cash and credit card and pay with your phone. People in China use it for everything from in-store and online purchases to receiving money transfers from friends and family abroad.

Tourists and business travelers to China can sign up for a free 90-day pass to utilize the service while in the country. Alipay allows Chinese citizens to send money abroad via an international transfer option.

In addition, Alipay can be used anywhere in the world. As a result of signing up with affiliated companies, it has expanded abroad. Alipay is accepted at many stores, banks, and hotels worldwide, especially in tourism hotspots frequented by Chinese visitors.

Why is Alipay so popular in China?

Credit card use is widespread in the West, but China’s cultural, social, and economic factors have resulted in a far lower penetration rate. Because of its many benefits and the fact that it meets the needs of both consumers and business owners, mobile payment has quickly acquired market share at the expense of cash.

Paying with a mobile device is quick, simple, and convenient. The simplicity of this payment option has won the favor of users. Alipay has been successful because of this pattern, the ongoing digital revolution in China, and the proliferation of affordable smartphones.

With QR codes as the foundation of mobile payment, businesses don’t need to upgrade their payment processing infrastructure to accept credit cards. Since no special equipment, such as a card reader, is required, even the smallest street vendors can accept Alipay. These are some major reasons why Chinese people are adopting Alipay in masses.

Which countries support Alipay?

Almost every developed country accepts Alipay, including the United States, United Kingdom, Australia, Hong Kong, Singapore, Canada, Brazil, Russia, Germany, Spain, and Italy. This means that you can accept Alipay from clients inside and outside of China, regardless of where your company is physically located.

How do I pay through Alipay?

Customers can use their Alipay eWallet for both online and in-store transactions.

1. Online payments

In the case of purchases made online, this is as easy as clicking an “Alipay” button under the several listed payment options. But first, you must ensure that the online store you are shopping from accepts the payment by Alipay.

2. In-store payments

You can use your mobile phone to make purchases in-store with Alipay. There are two modes when it comes to in-store payments with Alipay. Both of them are straightforward to use. One is merchant presented, and the other one is the customer-presented mode.

To use the merchant-presented mode, simply scan the merchant’s QR code from your phone. The amount to be paid can then be entered to finish the transaction. The merchant’s QR code is frequently displayed at restaurant cash registers and tables.

When a business accepts Alipay, they are already part of the network and are not required to purchase any additional hardware to process payments. Simple dissemination of a QR code is all it takes to reach out to clients.

The customer-presented mode is the second approach. Some retailers may also employ point-of-sale systems. Here, the consumer needs to submit a payment code for the store to scan and process the transaction. This approach can be quicker in some cases because it performs well even with a weak network connection.

Is Alipay Safe To Use?

The company’s safety record is good up to this point. No incidents of hackers or scammers acquiring access to users’ financial data have been reported. The mobile payment platform uses top-tier encryption and many other safety measures to stop fraudulent charges. The account is subject to regular scrutiny from the built-in risk monitoring system.

It uses biometric authentication for added security at both the user and the payment processor levels. A biometric, like a fingerprint or a face scan, is required in addition to a password to utilize this function. The facial scan in the application uses liveness detection technology to recognize the distinction between a user’s photo and a real one, so your account will remain secure even if someone tries to use a photo of you to log in.

Alipay offers a well-known buyer protection solution for its customers. If you use Alipay to buy anything rather than sending money to the vendor, you can take advantage of this feature. Until the buyer is satisfied with the merchandise, Alipay will hold the payment in escrow.

Benefits of Alipay for merchants

Alipay provides numerous advantages to businesses, including safety and a rise in sales:

• As an alternative to the high fees associated with accepting overseas credit cards, adopting Alipay can assist in reducing merchant fees.
• Tourists may find your business simply using geolocation due to Alipay’s integration with Alibaba’s travel platform Fliggy.
• With Alipay’s extensive merchant services, companies can advertise discount coupons to Chinese tourists and use other data-driven advertising strategies.
• When customers pay with Alipay, they don’t have to input their PIN, and there are no language difficulties.

Is Alipay similar to PayPal?

In essence, Alipay is to PayPal as China is to the United States. Other options for paying in CNY exist, like Taobao (Tmall) and Wechat pay; however, most stores only accept Alipay. Due to the tour pass’s built-in buying privileges, you can immediately begin purchasing in China without establishing a yuan (RMB) bank account. You can avoid credit card costs by paying using the funds you have on hand in your profile.

A consensus is that using Alipay while making purchases online is a safe and secure option. If you have a cell number and your smartphone, you can sign up in a moment, and your data will be encrypted by default to keep it safe.

State-of-the-art security measures protect all transactions, but it’s still smart to be cautious if using a mobile or online wallet. If you have a biometric locking system, use it, and avoid making purchases using public Wi-Fi.

Do your homework before attempting any financial dealings in China or online. It is simple to fall for a fraudulent POS system, whether you’re buying in New Zealand or elsewhere. If you use a mobile wallet, you should take extra precautions to safeguard your phone from theft and fraud.

Final Thoughts

There is little justification for avoiding its use while in China. Alipay supports the cashless movement in China, and its usage looks certain to grow. It’s a safe and reliable platform that’s always improving as it adds new features and functions. As a result, it has an average of 676 million monthly active users and over 1.3 billion subscribers.