Alibaba Has Almost all of China’s Mobile Commerce Market to Itself
For Chinese consumers looking to make big purchases, they aren’t turning to the banks.
Instead, they’re turning to Alipay, Alibaba’s mobile payment platform.
While banks have unreliable service and spotty coverage across the swath of mainland China, Chinese consumers have quickly grown to trust the ecommerce giant for much more than online shopping.
Whether it’s giving a gift to a friend or transferring money for the down payment on an apartment, Chinese consumers have become used to using Alipay as the method to exchange cash.
This has made Alibaba much better positioned than Tencent, whose mobile messaging platform WeChat has offered micropayments on its mobile platform for a while.
WeChat’s growth remains limited by consumers’ perception of the brand: it’s a place to send small payments to buy little things. Meanwhile, Alibaba is the place where the big money goes.
This is exciting for many reasons. For one, the Chinese market is massive. With well over a billion consumers, the scale that a China-based mobile payments platform could reach is unthinkable today. Unlike ecommerce, mobile payments transcend the meatspace and online divide.
You may buy vegetables at a farmer’s market using Square and a mobile phone in the morning, and then use that same mobile phone to buy an e-book on Amazon in the afternoon.
As a bridge between what Chinese consumers do online and offline, mobile payments are a major force in that country.
Despite the size of the opportunity, competition is and will remain limited. Regulatory barriers in China are beyond anything seen in the west.
This government intervention means Alibaba will need to play nice or face the wrath of the Chinese government.
Alibaba has already faced limitations on its mobile payments, and more may come. Yet the company has already placated regulators and developed itself as a major household name in China.
Its experience with both the government and Chinese consumers has made Alibaba trusted by both, which may help it quietly displace UnionPay as mobile payments continue to explode.