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AliPay Invades China’s High Streets With Mobile Barcode Payments

AliPay, the online payment division of e-commerce giant Alibaba, is today bringing the ‘mobile wallet’ to China’s streets and stores, allowing transactions between shops and their customers, who need only the AliPay app on their phones

Updates to the AliPay iPhone, Android and Nokia apps today will unleash the new mobile barcode payments feature. For end-users, all they need is an iPhone, Android or Nokia phone with the AliPay app installed. For retailers, they can accept the payments by scanning the barcode generated on their customer’s phone in one of two ways: with the camera of their own smartphone (through their own AliPay account), or with the barcode scanning gun attached to their cash register.

Alibaba is emphasizing how retailers need no extra equipment to accept the new AliPay mobile payments, and that the two hardware options available will cover most of China’s smaller retailers. At the moment, AliPay is aiming this at small shops, who need only to register (for free) to put the service into action. Alibaba’s head of PR, speaking to Penn Olson, said:

We believe this will be able to better serve the millions of small businesses across China, and make it more convenient for consumers to purchase goods as well. [...] Theoretically, large retailers could also accept and implement this payment option, but given most large retailers already offer point-of-sale terminals for credit/debit cards, we expect usage to be greater among individual users and smaller-sized merchants who are currently under-served in this regard.


Opening the mobile wallet


An AliPay mobile barcode being scanned by a retailer's barcode-reading gun


Pictured above is a retailer scanning the barcode that has been generated on one customer’s mobile. We’ve been told that the barcode is disposable, changing quickly with each transaction, and that the transaction and user’s account information is encrypted. Users will have the option to set a password for purchases, and to perhaps allow small amounts to be transacted password-free.

Shoppers can use funds contained just in their AliPay account, or on any debit or credit cards that they might have connected to it. The shopper will need to have internet access on their phone, by wifi, or 2G/GPRS or 3G.


Shaking up the High Street


When Square launched its iPhone-attachment card-reader in the U.S., Techcrunch described it as disruptive. And although AliPay has taken a different approach to mobile payments (obviating the need to buy extra hardware, for starters) it has similarly significant ramifications for consumers, small retailers, rival payment methods – such as Tencent TenPay, or UnionPay – and beyond. In the near future, it might even be adopted by big box retailers.

In coming months we’ll see how stores and shoppers react. It could well, in the next few months, start a boom in sales of cheaper Android and Nokia smartphones that are supported by the app – the lowliest is Symbian S60 v3 for Nokia featurephones – as well as initiate a surge in demand for 2G and 3G data on China’s three mobile networks.

AliPay and Alibaba have been in the news quite a lot these past two months, firstly with AliPay being controversially spun-off away from Yahoo hands to facilitate its getting a government-mandated online payments license (which also caused a split from PayPal), and then with the entire Taobao Group being divided into three parts so as to better focus on their B2C and C2C markets.


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