Understanding of Alipay

Mobile Payment Tool (Alipay)
Name
Institutional Affiliation
Mobile Payment Tool (Alipay)
Introduction
The financial sector has undergone rapid developments in recent years. The fintech revolution is driven by the emergence of information technologies such as blockchain, big data, cloud computing, and artificial intelligence. With these technologies, the traditional landscape of the financial sector continues to be largely transformed. The interplay between technology and finance has led to various forms of financial products and services such as digital banking, peer-to-peer (P2P) lending, cryptocurrencies, insurtech, and burgeoning mobile payments. Alipay is one of the mobile payment platforms and is part of the Ant Financial Services Group. The platform illustrates the continued fintech revolution and how mobile payments are increasingly disrupting traditional retail banking models and the entire payment sector (Lu, 2018). With its parent e-commerce giant company, Alibaba, Alipay has grown to be the world’s largest system for mobile payments. Together with WeChat Pay, the two platforms that have dominated China’s mobile payment sector are estimated to be about $5.7 trillion (Lu, 2018). Alipay is present in 70 countries, including the United States, the United Kingdom, South Korea, Japan, and Australia. With the popularization of mobile payment systems, many cities in China are becoming cashless and cardless societies. It is estimated that 40 percent of Chinese people do not carry cash when shopping (Lu, 2018). In contrast to its competitor Apple Pay that uses Near Field Communication (NFC) technology, Alipay employs the Quick Response (QR) code. Today, mobile payments and fintech solutions are raising debates in matters related to regulatory and legal issues. Common challenges that have been addressed in the industry and academia include data protection, regulatory approval regime, fintech financing, and fund security. To resolve some of the challenges, China established a unified clearinghouse for every service provider to enhance the industry supervision efforts. In the U.S. market, both Alipay and WeChat pay gained traction with the availability of merchants across the nation. However, with the trade tensions due to COVID-19 and political campaigns in 2020, there was a halt in the stream of travelers to the United States from China who would use the platforms with their homegrown applications while on holidays, traveling, or on business trips to the country. Up until the collapse of this stream, the Chinese payment applications had gained a foothold in the country’s in-store payment sector. Today, U.S. merchants have realized the cost benefits and simplicity of both Alipay and WeChat in payment processing. They will be expecting similar ways of payments from the payments industry (Consultative Group to Assist the Poor, 2021). In a nutshell, Alipay has very low processing costs, fast receipts of deposits, and zero chargebacks. While card payments remain to be king in many developed economies due to consumer protection, mobile payment apps influenced by Chinese brands are expected to divert transactions away from the conventional payment systems. This paper discusses the development of Alipay as a mob...