Alipay strikes more overseas partnerships

BI Intelligence

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Chinese mobile wallet Alipay, which is backed by Ant Financial, continues to make in-roads in increasing its international acceptance network after coming to agreements with several groups in Finland and Sweden. Interestingly, Alipay isn't inking deals with specific retailers or payment processors, as it often does.

Instead, the firm has teamed up with government organizations in Finland and Sweden that handle trade and commerce, which will give the mobile wallet an opportunity to promote its advantages to potential partners, regardless of industry. 

If Alipay wants to maximize its payment potential, it will likely have to seek out similar partnerships that can help it reach industries beyond retail. Alipay has been expanding overseas to give its Chinese users the ability to use the payment method while traveling, which is a massive opportunity to increase payment volume. In 2016, China was the world's leading outbound market in tourism, at 135 million travelers, as well as a leader in international spending after expenditure grew by 12% year-over-year (YoY) to reach $261 billion.

However, if the firm is going to capitalize on this, it must forge partnerships across various industries to offer consumers use cases other than in-store payments at retail stores — the number of Chinese tourists who listed shopping as the main reason to travel dropped from 68% in 2016 to 33% in 2017, according to a study by Hotels.com.  

It's important to note that Alipay could give users added use cases, and in turn boost international payment volume, if Ant's acquisition of remittance firm MoneyGram gets approved. MoneyGram's massive global network would significantly expand Ant's reach and potentially open up Alipay's services to a wider audience. The acquisition, which was first announced in January, would give Ant access to a network that consists of 2.4 billion bank and mobile accounts in over 200 countries and territories.

This would be an opportunity for Alipay to integrate the money transfer service with its product, allowing it to capture a piece of the $575 billion remittance industry. However, the acquisition is still waiting for approval, as it has faced criticism by US lawmakers, which means Alipay needs to continue aggressively searching for unique ways to reach users and increase international acceptance.

Digital disruption is rocking the payments industry. But merchants, consumers, and the companies that help move money between them are all feeling its effects differently.

For banks, card networks, and processors, the digital revolution is bringing new opportunities — and new challenges. With new ways to pay emerging, incumbent firms can take advantage of solid brand recognition and large customer bases to woo new customers and keep those they already have.

And for consumers, the digital revolution is providing more choice and making their lives easier. Digital wallets are simplifying purchases, allowing users to pay online with only a username and password and in-store with just a swipe of their thumb. 

Dan Van Dyke, senior research analyst for BI Intelligence, Business Insider's premium research service has written a detailed report that explores the digital payments ecosystem today, its growth drivers, and where the industry is headed. The report also: 

• Traces the path of an in-store card payment from processing to settlement across the key stakeholders.  
• Forecasts growth and defines drivers for key digital payment types through 2021.
• Highlights five trends that are changing payments, looking at how disparate factors, such as surprise elections and fraud surges, are sparking change across the ecosystem.

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