MOBILE PAYMENTS ARE THE FUTURE

Post the Conference on Alipay hosted by The Icelandic Travel Industry Association (SAF) and Federation of Trade and Services (SVÞ), an in-depth article profiling Alipay with Xiaoqiong Hu was published in Viðskiptablaðið: “Snjallsímagreiðslur eru framtíðini”. The full version of the article is translated into English as below. The Alipay payment services provided by the mega company Alibaba is now available in Iceland following the increasing number of Chinese tourists coming to the country. Xiaoqiong Hu, Head of Business Development in Europe of the $150bn company Alipay says that the company now has around 870 million customers in Asia who purchase more if they can use their smart phones. Alibaba has acquired smartphone solutions in Asian countries, however these payment solutions are still not offered in the West – it is probably a next step in the company’s growth. Most Icelanders know about the Chinese company Alibaba, which Jack Ma founded 18 years ago, but the sales on Single Day on November 11th was over $30.8 billion which is a new record for the company. Many undoubtedly do not understand how vast the company has become in many different areas of the Chinese economy. The fintech company Alipay is one of the offshoots from Alibaba, whereby the company took over Paypal in 2013 as the largest smartphone payment solution in the world. The company now has a 54% market share from China´s market for payment solutions through smartphone, now worth around $5,500 billion or ISK 680,3 billion. Xiaoqiong Hu, Head of Business Development of Alipay in Europe, was the keynote speaker at a conference in Iceland held by The Federation of Trade & Services and The Icelandic Travel Industry Association last week at Hotel Natura to introduce the mobile payment solutions for Icelandic companies. The purpose is to make it easier for the growing number of tourists from China and Asia to do business here in Iceland; last year there were 86.000 Chinese tourists. “After Asia users are part of the Alipay system, there is no doubt that Europe and the United States will be next” “Because we have 600 million users in China who regularly use Alipay services, we have a giant group of Chinese tourists who want to travel across Europe and therefore we want to distribute our services as widely as possible. We started three years ago in Europe and now our goal is to expand out network partners. We have grown very fast in Europe. This is not like a traditional industry where there is 20 to 30 percent growth; we have been doubling or tripling in size each month. The basic idea is to ensure that our customers can get the same service wherever they go in Europe as they can in China, so they can easily use Alipay to find the right products for themselves, obtain information in advance and in the end to use Alipay to pay for them, which they know well”, says Hu who has been a leader in the spread of Alipay mobile payment solutions in Europe since the company began in this continent. “Chinese customers have now used Alipay’s service for fifteen years, know it well and it is a sign of trust for them to the the company’s signs at the stores. They are therefore less likely to be worried about being cheated and feeling well received. One of the most recognised impacts for companies in Europe who take up Alipay’s payment mechanism is that Chinese tourists have bought much more. For example, Finnair put in place the option to pay with Alipay in their flights and in the past year and a half, their in-flight sales volumes of the airline increased by more than 100%.” Met by chance Finland has long built up its envious role as a connection centre for flights to the Far East, where Finnair has an old agreement to cross over Russia and China, which neither are party to international agreements for flight crossings. The partner for Alipay in Iceland and the Nordic countries is the Finnish company ePassi, an intermediary for the installation of the mobile payment solution here in Iceland. “Helsinki Airport is one of the most important airports in Europe to link Asia with Europe and thanks to this, there are increasingly more Chinese coming to Europe as a final destination or for connections to other places. Retailers who have a major portion of their business conducted with tourists were the first to offer the Alipay payment solution. We know about many cases in Europe and even in China, where there has been a sharp increase in business with Alipay users. For example, just in one month there was a sharp increase at Munich Airport after they began offering payments with Alipay. Even though the Chinese also travel a lot on their own everywhere, it is most important at the most popular destination. The solutions is also very good for large and well-known chains that have been very excited to be affiliated with Alipay. Merchants in fifteen countries in Europe now accept payments with Alipay and have increased from zero in three years to several hundred thousand in Europe today”, says Hu who says this has incidentally affected this growth. No longer a company but an ecosystem “I can assert that no other company in the world can provides as many services in equally diverse fields as Alibaba”, says Xiaoqiong Hu. Icelanders, on the other hand, know probably best the company under the name AliExpress where you can buy various products directly from China. “The company was originally founded to service others, with the establishment of Alibaba.com in 1999 by Jack ma. Three years later Taobao market was established for domestic trade between buyers and sellers, but recently Alibaba has invested in other sectors such as they did with Youku which is like YouTube in China or created new ones. Among these are Alibaba Pictures, similar to Netflix, Alibaba Sports, similar to ESPN, Alibaba Music, similar to Spotify, Alibaba News, Koubei, like Yelp it helps look for restaurants and recommendations for various types of entertainment, as well as the possibility of booking a table and even split accounts with their friends. That’s why Jack Ma calls it no longer a business but a new economy or biosphere to better serve the domestic market in China.” “Two years ago we met Niklas Löfgren, who manages International Business at ePassi at a conference, in fact a fintech conference, where we started talking together and he asked me about what I was doing. Because of this coincidence we had the opportunity to get to know about Alipay´s objectives and ePassi´s business. Within three months we had signed a partnership agreement and Alipay was installed on board of Finnair. Today ePassi is one of our main partners in Europe that provide Alipay services to companies and businesses, but we can say that both companies have the same DNA. Both are innovative companies that are very mobile and flexible, and both believe that mobile payments with smart phones are the future. The have been expanding to Iceland and other European countries, aside from the Nordics. Estimated at $150 billion Xiaoqiong Hu has herself worked in the financial sector the last fifteen years, including the Chinese cad company Union Pay and Deutsche Postbank Group in Germany, as well as Visa and Mastercard at EVO Payments International. “I am originally from China but studied in Germany and one of my roles was Managing Director at Union Pay for German speaking European countries. Then Alipay contacted me to advise of their expansion into Europe and Germany and as I was known in the sector, they asked me if I wanted to join them. I have been with them for three and a half years, where I started with oversight for German speaking countries and the Nordics”, says Hu. Alipay’s parent company is now considered the most valuable innovation company in the world, estimated at $150 billion or ISK 18.500 billion. “Today Alipay’s parent company is Ant Financial, the financial arm of the Alibaba biosphere, like Jack Ma wants to call it. Today Alibaba consists of more than fifteen different business units operating at very high level different areas, from inventory management, finance, the cloud, entertainment as well as the online store that was the beginning of its business. The purpose of Alipay was to originally serve the biosphere of Alibaba and then became the company’s general payment basis of trade between other sellers and consumers. Alipay was founded to service payments on the Taobao market area of Alibaba, but at this time buyers and sellers did not know one another and could not trust each other to do business online. That is why Alipay was founded to ensure that buyers and sellers could trade without any problems with Alipay’s guarantee behind the transaction. This was the original idea and expanded so fast in the past decade. Five years ago, smart phones came into the picture and Alipay quickly offered mobile payment services so users could enjoy the same experience as with internet shopping, in all kinds of traditional businesses without having to take place over the internet.” Because of this history, Alipay users have always been on the younger side but Hu says that this is changing. “The first generation of Alipay users on its network are mostly between 20 and 30 years of age. But as the corporate conglomerate now offers services around all of the daily life requirements, ranging from paying bills for utilities to buying a beer or ordering taxis and various others, then customers of other generations are also using this software and it is therefore spreading to other age groups”, says Hu, and now the company is expanding to more countries in Asia.