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10 May 2017

Alipay wages war against Apple Pay for US market

Alipay eyes lucrative US market for profit

In a move to expand to the international market, Alipay, operated by Ant Financial, has sealed a deal with First Data, giving it access to four million retail partners and will now compete with the likes of Apple Pay.

Earlier, the firm had partnered with hardware manufacturer Verifone for a roll out but it was limited to high-end retailers.

Here's all about it.

In context

Alipay eyes lucrative US market for profit
Ant Financial is on an expansion spree

Expansion spree

Ant Financial is on an expansion spree

Alipay has a strong presence in South East Asian countries and Ant Financial has vested interest in countries that are currently exploring digital banking systems, like Korea, Philippines, Singapore, Indonesia, India, and Thailand.

Alipay has recently teamed up with mobile payment app helloPay as a part of its expansion spree in Malaysia, Singapore, Indonesia and the Philippines to make its presence felt.


Alipay makes about 200 million transactions daily

Globally, Alipay has about 450 million active users and claims that it gets 200 million daily transactions marking $3 trillion worth transactions over a year.

What makes it attractive are its no-fee for transfer of fund policy and its revenue earning model via hosted third party services.

Alipay's main rival in China is Tenpay, which is integrated into the WeChat app.

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The US mobile payment market

US market

The US mobile payment market

Alipay will face difficulties in the US as it already has established players like Apple Pay, Android Pay, Samsung Pay, Microsoft Payments, CurrentC, MasterPass and Visa Checkout in a market pegged to reach $142 billion mark by 2019.

However, the Chinese company is now moving fast to acquire cross-border transfer service MoneyGram for $1.2 billion, to solidify its stance in this foreign market.

Ant Financial

Ant Financial: Strength of Small

CEO, Lucy Peng in 2014 said, "The word 'ant' embodies the strength of 'small' when all working towards a common goal."

While international players like American Express and PayPal have a market value of $75 billion and $53 billion respectively, surprisingly, Ant which operates mainly in Southeast Asia and has just started extending internationally, has an estimated market value of $60 billion.

Mobile transactions are on an overdrive

Cashless economy

Mobile transactions are on an overdrive

A report by IEEE has predicted that with the rise of mobile payments, the cash-based economy would end by 2030.

Biometric mobile payments through fingerprints and face recognition are also expanding rapidly and according to a report from Juniper Research, this segment would reach the $2 billion mark this year from a mere $600 million that it saw in 2016.

Digital India

India's cashless drive is here to stay

The demonetization move by PM Modi has made various mobile payment services like Paytm, MobiKwik, FreeCharge and mRupee witness rapid hike in transactions and users, boosting an industry that was considered nascent.

With the NDA government pushing intensely for a cashless economy to eliminate corruption and proliferation of black money in the economy, the digital payments space is going to thrive.

Privacy concerns in mobile transactions


Privacy concerns in mobile transactions

An IIM Bangalore conducted study said that there were gaping holes in the security of mobile transaction systems that need immediate attention.

Prof. De said, "The study found serious privacy concerns with all the services studied…apps such as Paytm allow for automatic linkage with the vendors, and the vendors can automatically deduct amounts without the explicit consent of the user."

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