Hi I’m Xinyi. Today I’m going to introduce Alipay, the app from ANT FINANCIAL, which is the affiliate of the Alibaba group. The reason I wanna introduce this company is to let you know that the most popular mobile payment app is not just about paying with your phone and QR code anywhere, but actually a complete personal fintech gateway.
Let’s look at the life of Yan as a college student in China. He uses his phone to do everything, buying online, ordering food, pretty much like us. He buys a lot online, mostly from Taobao.com, the largest online retailing platform in China. As a college student, he still lives mostly on his parents’ support, and is innocent about personal finance – no one teaches him about this in school.
1:30
Alipay is on the first page of Yan’s phone, since he uses it several times a day. He pays to the street food stalls near the school, he transfers money to his friends, and he uses the credit service on Alipay to pay for electronic devices. Sometimes he is too lazy to launch another app, and just buys movie tickets and calls a taxi to the movie theatre right on the Alipay app. There’s even a functionality on Alipay that plants real trees for you if the app think your payments reflects a green lifestyle. 2:30
As Yan is using Alipay to pay for his next GRE exam, Alipay is already making money out of it. Alipay charges the 3rd party platforms for transaction fees. It also collects interest from those who use the credit service but didn’t return on time, charge the banks for the gateway to their investment products, and squeeze the tiny bits between foreign exchange rates when a Chinese tourist is paying with Alipay at a shopping mall in New York City.
Also sells insurance, provides credit scores etc.
Ant’s insurance marketplace cooperates with more than 80 national insurance companies offering thousands of different products. You can also pay for the utlilties through this app.
So, are these services actually making profits?
3:30
Yes, thanks for the huge user base. With 1.2 billion global users of the ant financial products, it is making 611 million US dollars for a quarter. And as a private company, it is aiming to price tag itself with 200 billion dollars. Just for your reference, that is higher than Goldman Sachs. (4:10)
It is born in 2004 as the payment department in Alibaba for its ecommerce website, to connect the online sellers and buyer’s bank cards.
5:10
Now is the right time to emphasize again the relation between Alipay and the Chinese internet empire Alibaba. Alipay is a very early product that was born inside Alibaba online retailing ecosystem, and its birth can be counted as Jack Ma’s work. Jack, the founder of Alibaba Group. For those who might not be familiar with Alibaba, it takes 56% of the market share of online retailing in China, while Amazon takes 49% out of US. Luckily alipay as a byproduct of this online retailing empire, finds its own way of expanding. 5:50
So if you ask me what is the secret sauce, I would definitely consider it to be the fact that Ant Finance, as an affiliate of the Alibaba group, is standing on the shoulder of the giant. Thanks to the ecommerce empire, Ant Finance is getting adequate captical, is able to get the best Public relations, high company credits, and huge user base ---- since Alipay is the priority method of payment for its ecommerce websites. 6:30
Virtual credit card that enables you to buy things pn Alibaba’s ecommerce websites before you actually pay. This not only generates credit interest as an income, but also boots the sales on the ecommerce websites. It is worth mentioning that unlike in United states, people seldom use credit cards or credit services until the rise of Ant credit pay. They are creating the market out of this single app. (7:00)
So, what about the competition? First of all, I want you to know that bank cards is not a traditionally favored way of payment in China, and many small businesses just do not accept bank card. Considering that, the fact is, there are platforms that have some of Alipay’s functionality, but Alipay is just able to do perfecty in every possible direction that no real competitors exist. Again, thanks for the ecommerce giant behind this company.
(7:30)
Going gloabl
Can’t see the fall of the giant company behind it and can’t see how someone can possibly take away its market share.
In the worst case, it will just work well as the payment method for the ecommerce websites.
This company gathers the best resources and is adapting quickly to the changes in the society.
8:00