In a market where credit card uptake remains very low (an estimated 50 million in circulation) and cash remains the preferred choice for payments, Alipay has been one of the most successful online payment companies in China so far. While its status as the exclusive payments provider for Taobao certainly helps, Alipay has also won over users by taking extra care in providing multiple options for payment and fund transfer without the use of credit cards.
The standard option: online bank transfer
This is the most widely used option to transfer money into an Alipay account now and it is also the most popular method to make online payment in China. This procedure is fairly simple, although it requires standing in line at the bank, which in China could mean a wait of up to one hour or more.
Key steps are detailed below:
1. register as a user with Alipay
2. open a bank account at one of Alipay’s partner banks and activate the online banking services
3. sign in on Alipay website and select option to add funds via bank transfer
4. you will be transferred to the bank’s online banking site, where you need to sign in and enter the payment or transfer amount, and confirm
5. the amount will be directly debited from the bank account
The cash solution: cash remittance through China Post
Consumers who prefer to transfer money into their Alipay account using cash can do so through China Post, China’s postal service. While this may seem like a step backwards in terms of technology, the added convenience of a cash-based payment channel is fitting for the current state of payments in China. Key steps to transferring funds through China Post are described below:
1. register as a user with Alipay
2. at a local branch of China Post, fill in the Alipay cash remittance form with your name
3. at the service counter, hand over the money to the clerk, select a password to secure the account, and collect the transaction receipt
4. sign in on Alipay website and enter the China Post transaction number (on the receipt) and the password to complete the fund transfer
This service is a variation of the widely popular prepaid top-up cards used for phone bills, online games and virtual currencies in China. The cards are often purchased using cash at newspaper kiosks, small shops and at internet cafes. Using cash to transfer money into an online account is common in China, but Alipay is one of the first third-party payment companies to offer a cash-based top-up solution to its users.
This service was launched in March 2007 and in select partner China Post branches throughout China.
Alipay Fund Transfer Form from China Post
The credit card substitute: direct debit through Alipay/CCB debit cards
Though currently not yet widely available, the Alipay ‘Dragon Card’, as it is called in Chinese, is one of the more innovative fund transfer solutions offered by Alipay and their partner China Construction Bank (CCB). Instead of having to go through CCB’s online banking site to transfer money to Alipay, users that have an Alipay/CCB debit cards can directly transfer money from their debit account to their Alipay account through a streamlined process. For frequent Alipay users, this offers the added convenience of a credit card-like online payment experience to users who do not have a credit card. The steps are described below:
1. register as a user with Alipay
2. open an account at China Construction Bank and apply for the Alipay/CCB debit card; set the daily transaction limit and password, and receive the card immediately (at the bank)
3. sign in on Alipay website, activate the debit card,
4. enter amount to transfer and password to complete money transfer
This service was launched in November 2006 in select CCB branches around China, and according to the response on Alipay’s user forums, has been well received for its added convenience in streamlining the fund transfer and payment process.
Alipay/CCB Debit Card
The combination of these three fund transfer options allows Alipay users the flexibility to choose between cash and non-cash channels, and a special arrangement with CCB to issue specialized debit cards that enable direct-to-debit online payments. While there is still much room for improvement for Alipay - primarily signing up more partners for its cash remittance and specialized debit card solutions – we believe the company’s willingness to offer payment services through multiple channels will help the company to win new users and increase its presence outside of Taobao.
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