Only CX can save banks from the rise of the fintechs
Every bank is aware of the rapid growth of the Fintechs (Financial Technology companies). These innovative startups have been carving out slices of...
Alipay is one of the leading mobile-based payment systems in China. It’s a part of the enormous Alibaba retail empire and is used by over half a billion customers. It has never before been available in the UK, but this month (August 2017) Barclays started a trial that they plan to run until early 2018. Retailers will be able to accept Alipay payments facilitated by Barclays.
We have credit cards, Apple Pay, Google Wallet, Square Cash, and PayPal; who needs yet another payment system?
There are two answers to this question. First, the retailers offering Alipay in their stores are hoping to capture more business from Chinese tourists. Although the total number of Alipay users is enormous, they are mostly Chinese, so any immediate gains will be captured by retailers in locations where large numbers of tourists can be found.
Second, though, is the customer. Alipay has an enviable user base in China and they clearly believe that they can become a more globally accepted payment method, thanks to their experience back home.
Alipay does go beyond payment alone, by allowing brands to have featured pages right inside the payment system; it is possible to generate additional sales direct from the mobile device. They clearly believe that the additional functionality of their system, and the large existing user base, will help it win out against American rivals such as PayPal and Apple.
I think it’s an important challenge to the payment market. As we have seen in many other areas, there is often only one real winner once a network gets to a certain size – or network externality as economists like to say. It is hard for new social networks to challenge Facebook or new auction sites to challenge eBay. Once there are enough users on the network, then growth is almost self-perpetuating.
The same will be true for new payment systems and the reality is that the days of carrying a plastic card with a magnetic stripe may well be numbered. If your mobile device has all your payment information and can be secured more effectively than cards, then your wallet is likely to be much lighter in the near future.
The Alipay trial is limited at present, but assuming it goes well, I’m sure they will be looking for European customers to start using the system. Whether it will replace the other mobile-based systems only time can tell, but as we have already seen with many other apps, most customers don’t care about the country of origin of software – they just want it to work. Alipay has just as much chance of success as any of the systems already available in the UK, if they can offer a better service and leverage their existing large user base.
What do you think about the Alipay trial? Will customers embrace it? Leave a comment below and let me know, or get in touch on LinkedIn.