How does Alipay work?

If you own or manage a business in Australia, you’ve probably heard the name Alipay being mentioned in conversations regarding payment methods. You may have even had customers asking if you accept Alipay.

Alipay, Asian wallets and mobile wallets are hot topics at the moment. Businesses across several industries are listening and reacting to the growing demand for payment methods beyond traditional Visa and Mastercard payments.

In this article we’ll explain how Alipay works and why it’s become so popular, what businesses can benefit from offering Alipay, how Alipay handles security and how Alipay compares to other common wallets.

What is Alipay?

Alipay is a mobile payment app and digital wallet where users can store their debit and credit card details.

Users are able to pay for in-store purchases, online shopping, utility bills and transportation using Alipay without using their credit or debit card. Launched in China in 2004, it has become China’s leading third party payment solution.

As one of the world’s earliest, most advanced and most used digital wallets, Alipay comes with many other features that have helped it become ingrained in user’s everyday lives.

Like a physical wallet, Alipay doesn’t just store your credit and debit cards. It can store ID cards like your driver’s license, insurance cards, and store all the information you need to complete an online transaction such as shipping information and contact details.

Alipay is brilliant at storing a variety of information that may be used to verify identity or claim a booking such as a hotel reservation, plane ticket or event ticket.

Alipay is also a helpful financial tool, offering micro-loans, credit scoring, insurance and investment products such as assets, stocks and funds.

The convenience, ease of use and added security that Alipay provides has transformed the way Chinese nationals make payments, with Alipay now having over 1.2 billion users globally.

Alipay isn’t just available in China, Australian businesses are now adding Alipay to their in-store and online payment methods.

The size of the opportunity is significant. As of July 2023, there were approximately 152,000 Chinese international students in Australia, while 535,000 Chinese tourists visited during 2023 (Statista, 2024).

With over 100,000 retailers across ANZ accepting at least one Chinese wallet, offering Alipay is becoming an expectation rather than a ‘nice to have’.

Why is Alipay widely used by Chinese people in Australia?

For Chinese people who are spending time in Australia and require Chinese funds, a digital wallet like Alipay really is a necessity. Let’s discuss three major hurdles that your Chinese customers face.

1. Not all Australian businesses accept online payments from Chinese debit cards. While most Australian debit cards are from the Visa and Mastercard card schemes, most Chinese cards are from UnionPay. UnionPay has 93% of card spend in China (Datos Insights, 2023), however many online payment gateways used in Australian websites don’t accept these cards.

2. There are restrictions in sending funds outside of mainland China. Chinese residents have an annual limit of $50,000 USD, however using an electronic wallet such as Alipay can bypass this legally.

3. Also, international payments in China can’t be made online or in a bank app, they must be conducted at a bank branch. The payer must provide proof of identification and give reason why they’re sending funds overseas.

Aside from overcoming these hurdles, paying through Alipay also offers familiarity and Mandarin translation, both valuable in leaving Chinese consumers feeling comfortable and confident.

How do Alipay in-store payments work?

With little cost or effort, Australian businesses like yours can accept in-store payments via Alipay. Businesses simply offer the Alipay QR code at the point of sale for customers to scan, enter the payment amount and complete the transaction.

There is no cost to set this up at your businesses, as there is no electronic POS terminal. The onboarding process is less invasive than some other onboarding processes like direct debit. Simply submit Know Your Customer documentation and terms and conditions for approval. Once approved you’ll receive a unique QR code which can be displayed in-store and online. You’ll also gain access to an online platform where you can view and reconcile payments.

If your business is in one of the following industries, you’ve got excellent opportunities to reach Chinese customers with Alipay: