How can one really explain the phenomenon and colossus that is Alipay? Cherry Huang (General Manager, Cross-Border Business, South-east Asia, Alipay) did just that, documenting the goliath’s growth over the last 14 years from a “Chinese brand for Chinese consumers” to having international presence in over 40 countries.
Now described as a “lifestyle super app”, Alipay serves over 700 million Chinese daily active users, with services ranging from payments to financial services, social platforms, merchant resources and life services. Since its beginnings in 2004, it has continuously layered services on top of its original payments function, catering to every consumer need imaginable.
As China outbound continues to grow, Alipay is positioning itself as the facilitator of easier (and more enjoyable) travel. Huang quoted Jack Ma, saying, “When we talk about the global traveller, travel is not the purpose. The purpose is having fun… so [Alipay] is trying to enable that.”
It is currently present in 40 countries, with 10 in South-east Asia alone. However, interestingly, its first priority is not to expand its international customer base, but rather “[to follow] Chinese travellers and enable them” digitally worldwide instead. Yet getting merchants to adopt the technology at first was not that straightforward, as many found the concept of mobile payments difficult to wrap their heads around.
It began by working with duty free shops that naturally see a large volume of travel spend anyway, especially for China’s outbound travellers. From there, it was about continuing to demonstrate its ease and convenience, to convince other merchants to adopt it too. “It was not very easy, a lot of merchants were sceptical of Alipay… we started spreading out until more and more realised that it’s easier [than cash]. Alipay takes less than three seconds for a single transaction.”
Its current top three markets in South-east Asia are Thailand, Malaysia and Singapore, with Thailand coming out on top in terms of both transactions and merchant acceptance. In Bangkok alone, penetration is at roughly 70% and the numbers are still growing. Huang reported that now at least 65% of Chinese travellers use Alipay when abroad. So, if businesses want to set themselves up to cater to this ever-growing customer segment, there is pressure to adapt their payment services accordingly.
“Many times in the past, we stuck to tourist areas… 18 months ago, only 20% would accept Chinese transactions but today it’s over 90% [in Thailand].”
With its pervasiveness came greater levels of adoption amongst local consumers too, as Alipay saw a spike in transactions near Thailand’s universities, indicating growing use by students.
Cherry Huang: Hoteliers must embrace change.
Following the Chinese traveller
Understandably, many travel brands still maintain a hawk eye on China’s outbound travel market. “The good news is people are still very much willing to travel,” commented Huang, quoting a very specific 67.3% of travellers choosing Asia destinations.
Chinese travellers are also bigger spenders – a study by Nielsen shows Chinese travellers spend US$762 compared with US$486 by non-Chinese tourists.
Huang also said that often “cash is still king” with approximately 90% of Chinese consumers still relying on at least some cash when travelling. “If 90% are using cash, then that means 10% are already going cashless, not using any cash when they go overseas.” That’s not a number to underestimate.
Mobile payments for Chinese travellers are gaining rapid traction, with at least 65% of them relying on it when abroad. This compares with an 11% penetration for non-Chinese tourists. Its key reasons for use being greater speed, convenience, tracking spend and eliminating the hassle of dealing with change. So the numbers are expected to shift rapidly.
That shift will be hugely beneficial for merchants as people typically spend more when paying via mobile. “Average spend on mobile payments is 17% higher than cash payments,” explained Huang.
In a case study, Huang shared the story of ‘Alan’, a durian farmer in Malaysia who noticed the growing numbers of Chinese travellers eating local food. Smelling a potent opportunity, Alan set up an online durian store via Alipay and marketed himself as the king of the so-called King of Fruits. In the first month alone, he saw a 20-30% hike in durian sales, selling approximately one tonne of product.
The moral: engage with potential customers on their channel of choice, and they will come.
And with every transaction comes a flood of data, which Alipay categorises through over 5,000 user tags. The data spans each user’s background information and transaction histories, helping Alipay anticipate the growth of trends far ahead of many other companies who often have technical access to the same level of insights but don’t yet know how to harness it effectively.
Huang, who joined Alipay from a career in hospitality, talked about a new service Alipay was introducing – the Alipay Mini Program plugs into a hotel’s concierge service and works as “an app within an app” so that Chinese customers can easily access hotel services, local restaurants and shops without having to log into another app. It also allows hoteliers to meet, interact and transact with customers pre-trip and during trip.
On one key lesson she had learnt from moving from hospitality to a company like Alipay, Huang urged hoteliers to “embrace change”, saying it was critical for hoteliers to understand the power of rapid decision-making and speed to market.
Alipay, she cited, can take a sample of 10,000 users, launch a campaign and analyse results all within the space of two to three hours. Admitting “the pace is something I had to get used to”, she noted that speed is critical for any digital brand to not just survive but also come out on top.
