How Chinese Consumers Make Payment Online
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  • 1. Copyright © 2013 All rights reservedCIW China Internet Watch .com How Chinese Consumers Make Payment Online Version 1 1
  • 2. Copyright © 2013 All rights reservedCIW China Internet Watch CONTENT LEVEL: 2 Introductory
  • 3. Copyright © 2013 All rights reservedCIW China Internet Watch Chinese Online Payment Methods Chinese online payment methods could be simply divided into three categories: 1. Online banking 2. UnionPay and other 3. Third-Party payment These three kinds of payment methods all accept payment by credit card and debit card. 3
  • 4. Copyright © 2013 All rights reservedCIW China Internet Watch Online Banking •  All major banks in China offer online banking service. Card holders could go to banks to activate online banking service, then they can use online payment via online banking. •  Online banking is secured by digital certificate, issued by banks. For example, ICBC uses USB-shield as customer certificate. It looks like a U disk and acts as a shield to protect your money while doing online payment. Actually, it is a digital authentication for online banking. 4 ICBC USB-shield
  • 5. Copyright © 2013 All rights reservedCIW China Internet Watch ICBC Online Banking 5 Click here to log in
  • 6. Copyright © 2013 All rights reservedCIW China Internet Watch ICBC Online Banking 6
  • 7. Copyright © 2013 All rights reservedCIW China Internet Watch ICBC Online Banking •  Once you click Personal Banking, you will be linked to a log in page, there, you can enter your account and password to log in to your online banking. Then you can manage your account, pay for transactions, transfer money and other online banking services. 7
  • 8. Copyright © 2013 All rights reservedCIW China Internet Watch UnionPay and Other Third-Party Financial Payment •  UnionPay is the only interbank network in China, 85 Chinese banks joined UnionPay. •  UnionPay is much simple than online banking payment. UnionPay doesn’t require opening online bank service, registering procedures are quite easy. Besides, UnionPay also supports multiple payment methods, such as fast payment, online banking, etc. •  Other third-party financial payment includes ChinaPnR, 99bill and IPS. 8
  • 9. Copyright © 2013 All rights reservedCIW China Internet Watch UnionPay Online Payment 9
  • 10. Copyright © 2013 All rights reservedCIW China Internet Watch Third-Party Payment •  Alipay, like Paypal, is the biggest third-party online payment in China which is owned by Alibaba. •  Other third-party payment platforms include Tenpay, Shengpay, Yeepay,etc. •  Third-party offers a relatively safe payment method for consumers, because they don’t need to reveal personal banking information to each store where they buy products, instead they just enter the information on a third-party platform. 10
  • 11. Copyright © 2013 All rights reservedCIW China Internet Watch 11 48.7% 20.0% 10.0% 6.8% 6.1% 3.5% 3.0% 2.0% Alipay Tenpay Unionpay 99Bill chinapnr yeepay IPS other China Internet Watch Source: iResearch, 2013 Third-Party Payment Statistics China online third-party payment market share updates in Q2 2013 is shown below, Alipay is the market leader with 48.7% share. Followed by Tenpay and Unionpay.
  • 12. Copyright © 2013 All rights reservedCIW China Internet Watch 12 876.11 941.8 1065 1018.13 1121.65 12.9% 7.5% 13.1% -4.4% 10.2% 91.9% 53.0% 38.9% 31.2% 28.0% -20.0% 0.0% 20.0% 40.0% 60.0% 80.0% 100.0% 0 200 400 600 800 1000 1200 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13e transaction scale(billion CNY) QoQ Year-on-year increase China Online Third Party Payment Transaction Scale From Q2 2012-Q2 2013 is shown below. In Q2 2013, the total third-party payment reached 1121 billion yuan(USD 181.9 billion), with a 10.2% QoQ increase. China Internet Watch Source: iResearch, 2013 Third-Party Payment Statistics
  • 13. Copyright © 2013 All rights reservedCIW China Internet Watch Alipay •  Alipay is connected with Taobao and Tmall, and other major B2C platforms. •  Most Chinese do their online payment via Alipay. When they buy a product on Taobao, Tmall or other B2C websites, they could pay via Alipay. Alipay would keep the money until consumer receive the product, then it will transfer the money to the store. If there’s something wrong with the product, consumer could apply to get their money back. •  Alipay is connected with 14 major banks in China, ICBC, CBC,ABC, BOC, etc. 13
  • 14. Copyright © 2013 All rights reservedCIW China Internet Watch Alipay •  Alipay supports all kinds of payment method. 1.  Alipay account money When you have money in your Alipay account, you can pay directly by entering your password. 2. Online Banking Alipay allows you to log in to online banking to finish your payment, now Alipay supports 20 banks in China. 14
  • 15. Copyright © 2013 All rights reservedCIW China Internet Watch Alipay 3. Alipay fast payment Alipay fast payment allows users pay quickly without log in to online banks, saving users a lot of time entering bank account and password. Alipay cooperates with 37 banks in China, you can pay via Alipay fast payment without open your online banking service. 4.  Visa/Master Card/JCB Alipay supports Visa, Master Card and JCB payment. These card holders need to enter account name, personal information, and 3D secure password. There are also other payment methods supported by 15
  • 16. Copyright © 2013 All rights reservedCIW China Internet Watch How to Connect Banks to Alipay 16 Click here to add a new bank card to Alipay
  • 17. Copyright © 2013 All rights reservedCIW China Internet Watch How to Connect Banks to Alipay 17 After clicking on the plus button, you will be linked to a new page like this. Enter your bank account and phone number, you can continue finishing this procedure.
  • 18. Copyright © 2013 All rights reservedCIW China Internet Watch How to Pay Via Alipay ICBC Online Banking 1.  Online Banking Payment via Alipay Once you finish a transaction, you can pay your bill via online banking. First, you can choose a bank, like ICBC, which has been connected to Alipay. Then following below procedures, you can finish the payment linking to ICBC online banking page. 18
  • 19. Copyright © 2013 All rights reservedCIW China Internet Watch 19 Choose an online bank to pay, for example ICBC Click here to continue
  • 20. Copyright © 2013 All rights reservedCIW China Internet Watch 20 Click here to log in to ICBC online bank to continue payment How to Pay Via Alipay ICBC Online Banking
  • 21. Copyright © 2013 All rights reservedCIW China Internet Watch 21 After clicking the button, you will go to ICBC payment page. Enter your bank account and verification code to continue the payment. How to Pay Via Alipay ICBC Online Banking
  • 22. Copyright © 2013 All rights reservedCIW China Internet Watch Alipay Fast Payment 22 Choose a bank here to continue fast payment
  • 23. Copyright © 2013 All rights reservedCIW China Internet Watch Alipay Fast Payment 23 Enter you bank account password here Click here to confirm the payment As you can see, fast payment can directly enter password to finish online payment, rather than redirect to an online banking page which requires bank account, verification code and password. Fast payment is more convenient.
  • 24. Copyright © 2013 All rights reservedCIW China Internet Watch Alipay Visa/Master Card Payment 24 Click here to choose payment via Visa or Master card Choose the second option here: pay by credit card
  • 25. Copyright © 2013 All rights reservedCIW China Internet Watch Alipay Visa/Master Card Payment 25 After clicking, you can choose Visa, Master card or JCB. Click here to continue
  • 26. Copyright © 2013 All rights reservedCIW China Internet Watch Alipay Visa/Master Card Payment 26 After entering you credit card information and mailing address, you can click this button to finish your payment
  • 27. Copyright © 2013 All rights reservedCIW China Internet Watch •  Cross-border Website Payment 1. Real time payment solution: Chinese buyers purchase products or services from merchants ’website and make a payment in RMB. Alipay will deduct the payment from the buyers’ account in real-time. 2. Settlement: Alipay collects payment (RMB) from shoppers to BUY foreign currency, and will then remit the sum to receiving bank account of merchants in settlement. At the moment, Alipay support the settlement of 12 foreign currencies. 27 How to Integrate Alipay
  • 28. Copyright © 2013 All rights reservedCIW China Internet Watch How to Integrate Alipay-Settlement 1. Coverage: 12 settlement currencies: USD, EUR, JPY, GBP, CAD, AUD, SGD, CHF, SEK, DKK, NOK, HKD 2. BUY foreign currency: After collect payment from buyers’ account instantly, Alipay will buy foreign currency in T+1 day according to spot rate of settlement bank provides. 3. Type of settlement: a) Settlement by turnover: when merchants’ turnover accumulates to 5000USD (lower limit), Alipay will transfer the payments to receiving bank account of merchants immediately. b) Settlement by period: weekly, monthly, quarterly. 4. Settlement bank: Alipay opens 12 foreign currency accounts in Bank of China and China Construction Bank. 28
  • 29. Copyright © 2013 All rights reservedCIW China Internet Watch 29 Standard Cost
  • 30. Copyright © 2013 All rights reservedCIW China Internet Watch Requirements 1.Overseas business license and Alipay application form. 2.Shall ensure the reality and validity of application materials. 3.Alipay will audit the application documents. 30
  • 31. Copyright © 2013 All rights reservedCIW China Internet Watch Payment Procedures 31 Step 1: Consumer places an order on the Merchant’s website and chooses to pay by Alipay Step 2: The consumer logs in to the Alipay account to confirm the payment  Step 3: Payment status is communicated in real-time to Merchant and Consumer Step 3: Deliver goods/services Step 4: Funds transferred at T +3 to Merchant. Step 5:Merchant confirms the funds. Step 6: System integrator receives commission.
  • 32. Copyright © 2013 All rights reservedCIW China Internet Watch Conclusion •  In a word, there are three major online payment methods. Online banking, UnionPay and other third- party financial payment and third-party payment, like Alipay. •  Online banking is the support of third-party payment. The cooperation with Alipay and other third-party payment platform brings both benefits and threats to banks online service. •  For Chinese consumers, who do online shopping more and more frequently, third-party payment is both convenient and safe. Alipay is the widely used third- party payment in China. •  Also, UnionPay is very competitive when it comes to pay phone bills, electricity bills and buy air or train tickets, etc. 32
  • 33. Copyright © 2013 All rights reservedCIW China Internet Watch 33 You can contact Incitez for China online payment consultancy services: China.Pay@incitez.com