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Alipay, which began expanding into Europe through partnerships with processors including Concardis, Wirecard, and Worldpay earlier this year, continues to work to build its presence on the continent.
The firm is in talks with major retailers and processing partners in France, Germany, and the UK, according to Bloomberg. But the expansion has a catch — Alipay only plans to target Chinese tourists, not Europeans, according to Rita Liu, the head of Alipay Europe, Middle East, and Africa.
Moving into Europe strengthens Alipay’s already strong competitive advantage in China.Alipay is the eighth-largest merchant acquirer globally, according to the Nilson Report, and counts 450 million monthly active users (MAUs). But expanding abroad gives it even more opportunity to grow.
- Europe presents a major business opportunity for Alipay. In 2015, Chinese tourists spent $215 billion abroad, a 53% increase from the $165 billion spent the previous year, according to CNBC. The most popular destinations were France, Italy, Switzerland, and Germany. Expanding into these countries and targeting Chinese tourists will give Alipay the opportunity to capture a share of this volume, which could provide a revenue boost.
- Making it easier for users to pay with Alipay abroad keeps them loyal. Prior to launching in Europe, Chinese Alipay customers would have to use cash or a bank-issued payment card to pay abroad. Alipay, which connects directly to users’ bank accounts rather than through card network rails, can now capture this business, rather than surrendering it to a separate provider. That’s particularly crucial right now, as international mobile wallets move into China and the country opens up its card ecosystem to foreign players like Visa or Mastercard, because it keeps users loyal to Alipay rather than giving them a reason to adopt these products, which they can now use at home more easily, while abroad.
For major payments firms in Europe, Alipay’s laser focus on Chinese tourists rather than European locals could come as a relief. The wallet’s Chinese dominance could have worried European payments players that it would have a similar impact in the West, particularly in countries like the UK that are already accustomed to contactless payments and consistently willing to test and adopt new technologies. But the firm’s focus on Chinese users will allow European companies to avoid the threat Alipay may have posed while reaping the increased volume its entrance could bring.
Mobile payments are becoming more popular, but they still face some high barriers, such as consumers’ continued loyalty to traditional payment methods and fragmented acceptance among merchants. But as loyalty programs are integrated and more consumers rely on their mobile wallets for other features like in-app payments, adoption and usage will surge over the next few years.
Evan Bakker, research analyst for BI Intelligence, Business Insider’s premium research service, has compiled a detailed report on mobile payments that forecasts the growth of in-store mobile payments in the U.S., analyzes the performance of major mobile wallets like Apple Pay, Android Pay, and Samsung Pay, and addresses the barriers holding mobile payments back as well as the benefits that will propel adoption.
Here are some key takeaways from the report:
- In our latest US in-store mobile payments forecast, we find that volume will reach $75 billion this year. We expect volume to pick up significantly by 2020, reaching $503 billion. This reflects a compound annual growth rate (CAGR) of 80% between 2015 and 2020.
- Consumer interest is the primary barrier to mobile payments adoption. Surveys indicate that the issue is less the mobile wallet itself and more that people remain loyal to traditional payment methods and show little enthusiasm for picking up new habits.
- Integrated loyalty programs and other add-on features will be key to mobile wallets taking off. Consumers are showing interest in wallets with integrated loyalty programs. Other potential add-ons, like in-app, in-browser, and P2P payments, will also start fueling adoption. This strategy has been proved successful in China with platforms like WeChat and Alipay.
In full, the report:
- Forecasts the growth of US in-store mobile payments volume and users through 2020.
- Measures mobile wallet user engagement by forecasting mobile payments’ share of their annual retail spending.
- Reviews the performance of major mobile wallets like Apple Pay and Samsung Pay.
- Addresses the key barriers that are preventing mobile in-store payments from taking off.
- Identifies the growth drivers that will ultimately carve a path for mainstream adoption.
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