Starbucks and Alipay Team Up in China
It’s the kind of partnership that was probably only obvious in retrospect, but a new report suggests that all 2,800 Starbucks locations in China will now accept Alipay as payment for coffee drinks and the various other forms of merchandise involved in a Starbucks location.
What’s more, Alipay is offering up some incentive to help users get acquainted with the new payment tool, and put it to use more often. Those who spend 50 yuan—about $7.50 as of this writing—get a five yuan voucher—about $0.75—for use later on.
This is a measure not only good for Alipay, who will land some new payments to process and profit from accordingly, but also for Starbucks itself. Starbucks has plans to open 5,000 locations in China by the end of 2021, which will almost double its current presence. To get there, however, it’s going to need its customers in play, and mobile payments will be a great way to convince the average Chinese coffee-drinker to join in the frenzy.
What’s unusual about this, though, is that some are expecting Alipay to bolster Starbucks’ fate in China. While it certainly will be a welcome development to some users, it’s hard to see how Alipay is going to be a big boost to Starbucks’ Chinese fortunes. Starbucks already has the support of WeChat Pay in its operations, and as we found not so long ago, most Chinese tend to turn to WeChat Pay first for small purchases. Alipay, meanwhile, is seen more as the “big bucks” alternative, thanks to its connections in wealth-building.
The numbers back this projection up somewhat; WeChat Pay already accounts for 29 percent of Starbucks’ transactions just in the first quarter of 2017. Alipay has a larger market share than WeChat Pay, so even if only half of Alipay users turn to it to cover the check at Starbucks, that’s still a major chunk of cash going directly into Starbucks’ coffers. Plus, Alipay could benefit from this in expanding internationally, as Alipay continues its worldwide push.
It remains to be seen how well this will work, if enough Alipay users will use it for small payments to matter, but it’s seldom a bad plan to accept more payment systems in general.