Ubiquity, Market Size Push Alipay to Top Spot in E-Commerce Payments
Alibaba’s Alipay has taken the crown of the world’s most popular online payment method, accounting for 44 percent of global e-commerce spending and projected to grow to 60 percent by 2020, according to a new report from U.K.-based payments processor Worldpay. The Global Payments Report 2016 cited the sheer size of Alipay’s home market of China as a major factor of the platform’s success. But Alipay also benefited from particularly good timing, entering the market when mobile adoption in China was booming and consumers were spending rapidly.
Alipay has become “embedded into daily life interactions and activities,” the report noted. Along with using Alipay to make purchases and P2P transactions, Chinese consumers also use the service to book taxis, search for restaurants and chat with friends. Western consumers, meanwhile, are more likely to use specific, purpose-built apps for those use cases, according to Worldpay. In markets such as the U.S., “pure payment companies like PayPal compete for market share with technology vendors such as Apple and Google, who in turn compete with smaller-scale offerings from hundreds of payment providers and merchant-owned services,” the report said.
The coming years could see consolidation in Western markets, with technology providers most likely to serve multiple roles for consumers, like Alipay does in China, according to the report. In-browser payments by Apple and Google, and Facebook’s money transfer service could mark the first steps in that transformation, the report predicted. But payments specialists like PayPal and e-commerce giants such as Amazon will need to come onboard, or the market could remain fragmented for years to come, Worldpay noted.
Meanwhile, Alipay is expanding its presence outside of China. The company recently struck deals with First Data and Verifone to enable Chinese consumers shopping at select U.S. retail locations to pay using Alipay. The company also has inked several acceptance partnerships in Europe, and aims to have 60 percent of its transaction volume coming from outside China within the next 10 years.