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Alipay striving to make deals with more banks, luxury brands in Europe
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Two years after expanding into Europe, Alipay said the biggest challenge for its services lies in a highly divided market, and more local cooperation will help solve the problem.

Alipay, China’s biggest payments firm run by Alibaba’s Ant Financial, attended Money 20/20, Europe’s largest fintech event on Monday, to announce plans to strike deals with as many banks and luxury brands locally in bid to serve Chinese mainland tourists, students and expatriates.

Wang Li, who manages Alipay business in Europe, Middle East and Africa addressed the event, saying the best way to integrate all the separate markets is to “make more friends”, especially local banks and merchants.

“Local banks with a long history are major players in the countries, although each of them occupies comparatively minuscule share of the whole market, unlike in China where the top 10 banks take up 60-70 percent of the market share,” Wang said.

In her view, a market in a patchwork pattern actually leads to low efficiency and therefore high cost for consumers. Alipay mainly targets Chinese tourists and Chinese expatriates. Now, it has signed deals with over 100 banks and over 40 digital wallet companies in Europe, reported thepaper.cn, a Shanghai-based news portal.

Alipay has had uneven development in Europe. In Russia, it’s become the biggest winner with all supermarkets and retailers in the country now using its payment services, while in France where high-end consumption dominates, emerging companies like Alipay are still struggling, according to Wang.

“Being a developed market with a cultural heritage, it’s now attracting lots of Chinese tourists. (We) must work with luxury brands,” she said. Since Alipay ventured into the European market in October 2015 via Germany, it has been using the hefty “spending power” of the Chinese tourists as a leverage to convince more merchants to accept its payments service.

Chinese travelers boast the biggest commercial value by significantly outspending their nearest competitor - Americans. Chinese spent $261 billion on shopping abroad in 2016 while Americans spent $122 billion, Quartz (qz.com), a news website owned by Atlantic Media reported, citing data from the United Nations travel body.

Alipay’s rivals in the market are facing similar hindrance that is holding back the Hangzhou-based platform. Google integrated Android Pay and Google Wallet in January 2018 into one payments service called Google Pay. Google Pay also just took off in the market.

Florence Diss, the commercial cooperation manager of the new platform, admitted they devoted most energy and time last year just to comply with the market’s data privacy laws, known to be the most stringent worldwide. The General Data Protection Regulation (GDPR) just became effective from this May.

An industry insider who’s familiar with the overseas market told thepaper.cn the problem of data privacy has crippled some Chinese payment firms’ efforts to “go global”.  In developed markets like Japan and Europe where privacy is highly valued, the platforms hailing from China are rejected because of their feature of location tracking.

“As long as I have my phone with me, people in Hangzhou will be able to detect where I am with up to five square meters of accuracy,” Wang Li told Quartz in an earlier interview.

“They will know for sure that I am in this room, and not another room. Imagine this in a shopping mall. In any five square-meter space, we can tell you what promotions are around you.”

The industry insider warned Chinese platforms to pay more attention to the data they collect from consumers. “As a matter of cultural difference, privacy is taboo in these countries while in China, it’s not yet a problem. The data collected from consumers must be authorized by them for usage." Wang Li told to Quartz that Alibaba has over 100 people working on GDPR in its Hangzhou headquarters.

Tencent’s mobile payment is also competing with Alibaba in the market. An executive with Hipay, a local payment firm, told thepaper.cn that although Alipay has gained the most robust growth among Chinese players, WeChat, a social media and mobile payment app, is also gaining a foothold, after entering the market two years later than Alibaba.

“Many retailers in France are only aware that Chinese travelers know how to use Alipay, while they have no idea Chinese people actually use Alipay and WeChat almost equally,” he said, indicating if the market gets to know WeChat has successfully combined social media and payment functions, the latecomer may start to gain momentum.

Now, Hipay has signed an agreement with Alipay and is talking with WeChat at the moment.

 


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