Chinese Internet giant Alibaba Group Holding Ltd. (BABA) has strengthened its mobile payments business in efforts to compete with fintech industry players such as Apple Inc.’s (AAPL) Apple Pay, PayPal Inc. (PYPL), and Square Inc. (SQ). Alipay, a part of Alibaba’s Ant Financial financial services businesses, will expand operations outside of its main market into the rest of Asia, Europe and the United States. (See also: Fintech: Square Maintains Hold on Mobile Payments.)
Alibaba Expands Services and Scales Globally
The same company that beat out eBay Inc. (EBAY) in the race for the booming Chinese e-commerce market, now plans to compete with U.S.-based firms in mobile payments, reports Forbes. A decade after the rise of e-commerce, China’s market has surged more than 10 times in size, in turn benefiting Alibaba and providing the company with substantial capital in which to grow its payments, big data, entertainment and other new businesses.
In terms of U.S. competition facing Alipay, various mobile payments leaders have scrambled to gain market share in the emerging mobile space. A recent study by Euromonitor estimates mobile commerce to grow over three fold by 2021, amounting $3 trillion in four years. With all key rivals maintaining core businesses outside mobile payments, such as Square’s merchant transaction hardware and lending arm, Alipay could potentially swoop in with its developed service, which already boasts 450 million users worldwide.
Alipay Could Swoop In
Alipay’s first stride into the U.S. market include partnerships with payments processors First Data and Verifone. As the Chinese tech firm quickly expands, signing on over 80,000 retailers across 70 countries for mobile payments in just one month, it inked deals with at least ten international airports in Europe, Asia and the Americas. The latest of such partnership includes a deal with DFS Group in which Alipay will debut at San Francisco International Airport.
Alipay’s strategy revolves around targeting the approximate 120 million Chinese tourists traveling abroad each year. In face of no clear mobile payments leaders, it’s likely Alipay will steal a share of the booming mobile payments space against traditional U.S. payments providers. (See also: U.S. Banks Team Against Online Payment Apps.)