Alipay is a payment platform and digital wallet based in China. It is operated by Ant Group, a financial technology company affiliated with the e-commerce company Alibaba Group. Users pay in shops by scanning or showing a QR code, pay online and inside other apps, send money to one another, and pay bills, all from a mobile application linked to their bank accounts and cards.
Alongside WeChat Pay, Alipay is one of the two services that dominate everyday consumer payments in mainland China. It is licensed as a non-bank payment institution and supervised by the People's Bank of China. Its app also acts as a super app, carrying investment, credit, insurance and many third-party services.
History
Alibaba launched Alipay in 2004 to solve a problem of trust on its Taobao marketplace. Buyers were reluctant to pay strangers in advance and sellers were reluctant to ship unpaid goods, so Alipay held the buyer's money and released it to the seller only after the buyer confirmed delivery, a form of escrow payment. The service was later opened to merchants outside Alibaba's own sites.
Ownership of Alipay was moved out of Alibaba Group in 2011 into a separate Chinese company, which became Ant Financial Services Group in 2014 and was renamed Ant Group in 2020. In 2013 the company introduced Yu'e Bao, which let users place spare wallet balances in a money market fund; it grew into one of the largest such funds in the world. Ant Group's planned stock market listing in Shanghai and Hong Kong was suspended by the authorities in November 2020, shortly before trading was due to begin, and the group subsequently went through a regulator-directed restructuring of its financial businesses.
How payments work
A user registers with a mobile number, verifies identity under China's real-name rules, and links one or more bank cards. Payments can be funded from the wallet balance, a linked bank account, a card, or a credit product offered through the app.
- Customer-presented code. The app displays a barcode or QR code that changes frequently. The cashier scans it, and the amount is charged to the user's chosen funding source.
- Merchant-presented code. The shop displays a printed or on-screen code. The customer scans it, enters or confirms the amount and approves the payment. This QR payment method needs no card terminal, which made acceptance cheap for street vendors and small shops.
- Online and in-app payments. On websites and in apps the user is passed to Alipay to approve the payment with a password, fingerprint or face scan.
Merchants receive funds in their Alipay account and withdraw them to a bank account. The fee charged to merchants is low by international card standards, and personal transfers between users are generally free, with a charge for withdrawing larger sums to a bank.
Regulation in China
China began licensing non-bank payment companies in 2010, and Alipay was among the first to receive a license. Since then the central bank has tightened the framework. Payment institutions must hold customers' balances in full in accounts at the central bank, which removed their ability to earn interest on the float. Online payments between payment institutions and banks must be routed through a central clearing platform, NetsUnion, in place of the direct bank connections the companies had built. Rules on barcode payments set limits by level of authentication, and authorities have pressed the large wallets to open their codes to one another and to UnionPay.
Alipay also operates beside China's central bank digital currency, the e-CNY: a bank within the Ant group is among the institutions that distribute it, and the Alipay app can be used to pay with it.
Use outside mainland China
Merchants in many countries accept Alipay so that Chinese travellers can pay as they do at home; the merchant is paid in local currency and the traveller is charged in yuan. Ant Group has also built Alipay+, a cross-border service that connects partner wallets from several Asian countries and elsewhere, so that their users can pay at participating merchants abroad, including in China. A separate wallet, AlipayHK, serves Hong Kong residents under a local stored value facility license.
Visitors to China can register with a foreign phone number and link an international Visa, Mastercard or other card, an option broadened in 2023 to ease payments for tourists in a country where cash and foreign cards are not widely used.