Cash, Credit, or Alipay?

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by Genna Liu
Alipay, offered as a mobile app, is used by more than 300 million merchants and consumers in China. [Image: Zhang Qiuyun/Bai Geng]

US stores will soon offer another payment option. Ant Financial — an Alibaba subsidiary — and payments processor First Data recently announced that consumers will be able to use Alipay at over 4 million merchants nationwide. The two companies previously partnered in 2016 to conduct test trials for Alipay in California and New York.

Alipay is the world’s largest online and mobile payment platform with over 450 million users. The payment operator is accepted in 70 international markets by over 100,000 retailers and has a 54% market share in China. Users can pay offline by scanning individual QR codes, which will be developed for US merchants by Acculynk, First Data’s subsidiary. Alipay is also used online to transfer money and pay utility bills.

The deal between Ant Financial and First Data is aimed at enhancing the experience of Chinese tourists in the United States. More than 390,000 Chinese tourists visited the United States in 2016, a 10% increase from the previous year. Chinese visitors are predicted to contribute more than $40 billion to the US economy in 2017, spending between $500 and $3,500 per visit. Delta Air Lines began offering Alipay as a payment option on its booking site in 2015, making buying tickets more convenient for customers in China. With Alipay now widely available in the United States, Chinese visitors can bypass the international transaction fees involved in exchanging currencies and using credit cards. The Alipay app can conveniently be used for other travel needs like calling rides, booking hotels, and buying tickets.

In addition to working with First Data, Ant Financial is in talks to buy US money-transfer service firm MoneyGram International for $1.2 billion. WeChat Pay, another Chinese payment operator giant, entered the US market through a partnership with mobile payment platform Citcon. US payment operators are also expanding into China. Apple Pay teamed up with China Union Pay in February, allowing the Chinese company’s cardholders to use Apple Pay.

Genna Liu is a research intern at the East-West Center in Washington and a government and economics student at Dartmouth College.