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Alipay, what it is and how it works

Alibaba, creator of Alipay, has become a household name over the last decade or so. The company operates through three main divisions – Alibaba Group Holding Limited (ALI), Alibaba Cloud Computing Technology Co., Ltd. (BBA) and Ant Financial Services Group. ALI is the parent company of BBA and Ant Financial. 

Alibaba was founded in 1999 by Jack Ma. He wanted to create an ecommerce site where customers would be able to shop from anywhere at any time. In 2000, he launched Taobao, China’s largest ecommerce marketplace. Since then, the company has grown into a global powerhouse. Today, its core businesses include online shopping, cloud computing, financial services, mobile payments, logistics, artificial intelligence, and consumer finance.

What is Alipay? 

Alipay is China's biggest money transfer app and the country's second largest online shopping mall. Founded in 2004, the firm is owned by Alibaba and competes with Tencent Holdings' WeChat Pay and QQ Wallet. 

The app allows users to pay friends and family without needing bank accounts, while also offering instant transfers and low fees. In addition to China, Alipay has expanded to over 300 cities worldwide and boasts more than 800 million registered users. 

Further reading: Alipay+: Connecting you to over a billion customers

Is Alipay safe? 

It is known for being extremely secure, and there have been no reported cases of fraudsters or hackers accessing users’ accounts. 

  • The app uses multiple layers of protection to keep your data safe. First, it encrypts all messages sent via the app.  
  • Second, it requires a password and a verification code to make purchases.  
  • Third, it employs a risk monitoring system that checks for suspicious activity in your wallet every 30 seconds.  
  • Finally, it has a two-factor authentication process that requires both a password and a biometric, like a fingerprint or a facial recognition scan. 

How does Alipay work?

Alipay was designed specifically for Chinese users and businesses — and because the vast majority of transactions take place within China — a Chinese bank account is necessary to access the system.  

For foreigners visiting China, however, Alipay offers a short-term feature known as Tour Pass. You can use it to make online purchases for up to 90 days.

1. Download the app and register. Then, you can simply link your debit or credit card (e.g. Visa, Mastercard, Diners, JCB, etc).

2. Select “Payment Method” on the merchant site, and then choose “Alipay” as your payment method. 

3. On the online store checkout page you will see a blue button labeled “Tour Pass.” Clicking this opens a pop-up window where you can enter your passport number and date of birth. Then, click “Confirm” and you will receive a code via SMS. Enter the code into the pop-up window and click “Submit.” Your digital wallet will now be linked to your Alipay account. 

4. The next step is to purchase something. At the bottom of the screen, there is a small box with a red dot in the middle. Click on this, and then click “Buy.” 

5. In the shopping cart, you will see a green bar across the top showing how much money you have left. When you reach zero, the item will no longer be available for sale. To add funds to your wallet, simply scroll down and tap “Deposit.” 

You can buy anything from restaurants to electronics stores to clothing stores. But you cannot use Alipay to buy airline tickets, rent cars, or withdraw cash from ATMs outside of China. 

Online payments

Alipay's online payments provide customers with a convenient and secure way to make purchases on websites and mobile apps.  

With their Alipay account, customers can seamlessly pay for goods and services online without the need for credit cards.  

The process is straightforward:

1. When customers are ready to make a payment, they can select Alipay as their preferred payment method during the checkout process.

2. They are then redirected to the Alipay platform, where they log in using their Alipay credentials.

3. After authorizing the payment, Alipay securely processes the transaction and transfers the funds from the customer's Alipay account to the merchant's account.  

This eliminates the hassle of entering credit card information for each transaction and offers a more streamlined online shopping experience for customers.  

For business owners, accepting Alipay as an online payment option can be highly beneficial. By integrating Alipay with your website and apps, you can attract both Chinese and international customers who prefer using Alipay for online transactions.  

This broadens your customer base and enhances the potential for increased online sales.  

Additionally, Alipay is known for its robust security measures, protecting customers' financial information and reducing the risk of fraudulent transactions.

Alipay, with its expansive user base, offers a unique opportunity for businesses looking to streamline their online payment processes. Understanding the nuances of integrating Alipay can provide valuable insights into enhancing customer satisfaction and optimising transaction efficiency. If you're considering the adoption of Alipay, you can find out more about online payment solutions here or you can speak to one of our highly trained payments experts here

In-store payments

Alipay's in-store payments offer customers a fast, contactless, and convenient way to pay for purchases at physical retail stores using their smartphones.  

1. At the checkout counter, customers can simply scan a unique QR code displayed by the merchant.

2. This QR code contains the payment information for the specific transaction.

3. The Alipay app on the customer's smartphone verifies the payment details, and upon confirmation by the customer (which may involve entering a PIN or using biometric authentication), the payment is processed. 

For customers, using Alipay for in-store payments eliminates the need to carry cash or credit cards. It streamlines the checkout process, making shopping experiences more efficient and secure. The simplicity and speed of the payment method make it a popular choice for users who value convenience in their daily transactions. 

For business owners, accepting Alipay in-store payments can be advantageous in several ways.  

Firstly, it allows you to cater to the preferences of Chinese tourists and local users who are accustomed to using mobile payments. This can be especially relevant in regions where mobile payment adoption is high.  

Secondly, Alipay's in-store payments reduce the reliance on cash transactions, reducing cash handling and related security concerns. This can enhance the overall operational efficiency of your businesses and improve the customer experience.  

As the retail landscape evolves, integrating modern payment solutions like Alipay can significantly enhance the in-store experience for customers. With its wide adoption and emphasis on convenience and security, Alipay offers a path to not just simplifying transactions but also broadening your customer reach and elevating your service quality. If you're interested in receiving in-person payments from Alipay customers, you can speak to one of our experts here or find out more about our in-person payment features here

How can I accept Alipay payments from customers? 

Alipay is one of many different payment methods in China. While there are plenty of options for those looking to accept credit card payments online, it seems like Alipay might be the best option for small businesses. 

The mobile payment system is very similar to PayPal, allowing merchants to accept payments directly from their customers. After setting up an account, merchants simply log into the Alipay app and begin taking payments. 

There are no fees involved for accepting Alipay payments, and once signed up, merchants don’t even need to worry about how much money they charge their customers. Instead, they choose what percentage of each transaction goes to them and how much they want to keep. 

Once the customer pays, the merchant receives a notification within 24 hours. From there, they can either send the funds to their bank account or request a refund.

How to make an online payment with Alipay? 

Alipay offers consumers a convenient way to pay for goods and services. To make an online payment, simply download the app on your smartphone, register for an account, log into your account, choose the shop where you want to buy something and select the payment option. You can either use Alipay directly or link your credit card. Once you've completed the transaction, you'll receive a receipt via email within 24 hours. 

If you're using a desktop PC, Alipay will prompt you to scan a QR Code with your phone. Simply open the Alipay app and follow the instructions.

What are the benefits of using Alipay? 

Using Alipay is easy. You just download the app onto your phone and register with your bank account. Then, whenever you want to pay, simply scan the QR code or enter your pin. This is faster and safer than carrying around a lot of cash. 

You can use Alipay anywhere, even if there isn't an ATM nearby. And since it's cashless, you won't have to worry about losing money while shopping. 

The biggest advantage of using Alipay is security. Unlike credit cards, where hackers are always trying to steal your personal info, Alipay uses biometrics to verify transactions. So, no matter what happens, you'll never lose access to your funds. 

When you use Alipay, you don't need to worry about carrying around a lot of cash. You won't have to count out wads of bills to make purchases either. Instead, you'll just input your phone number into the app, scan your fingerprint, and enter your pin code. This process takes less than 20 seconds. 

You can even set up recurring payment plans. If you want to buy something every month, you can do that too. All you need to do is go to your account settings and choose the frequency of your payments. 

Another benefit is speed. With Alipay, you can complete transactions quickly. You won't have long lines at checkout counters like you might experience at some brick-and-mortar stores. 

If you're looking for a fast alternative to PayPal, then Alipay is worth checking out. 

FAQs

Is it possible to use Alipay without a Chinese bank account?

Yes, Alipay has a feature for non-Chinese users called Tour Pass. This is a 90-day service that allows foreigners, particularly tourists, to use Alipay with international banking information. 

Can I use other foreign currencies on Alipay instead of Chinese yuan?

Yes, Alipay offers an international payment service that accepts 18 different currencies. Alipay accepts US dollars, Euros, and British pounds. 

Is there a fee for using Alipay's payment service?

Depending on the type of transaction you perform, there may be a charge. If you transfer funds from your Alipay Wallet to another Alipay Wallet, you won't be billed a charge. However, if you transfer funds to an external bank, you will be billed a 0.1% charge. 

Is Alipay similar to Paypal?

Both Alipay and PayPal are used by people to pay each other using credit cards. However, Alipay allows buyers to delay paying until after receiving the goods or services they purchased. 

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