Mobile payments may not yet be mainstream in the U.S. but the potential of cross-border commerce may become a big driver.
For a view of the landscape of future mobile payments, I caught up with Jingming Li, Vice President of Alibaba Group and Chief Architect of Alipay International, who has some interesting predictions on where commerce and payments are headed next year.
Alipay is a major digital payments force, with 800 million registered accounts in China and providing cross-border payments among 180 financial organizations in 15 currencies.
“Alipay is used for paying bills, online sales and even paying parking fines,” says Li. “Almost all online sellers in China are on the Alipay platform.”
The payments platform is noted for the large cash haul that passed through it on Nov. 11, when unmarried men in China celebrated Singles Day by buying more than $5 billion worth of goods through Alipay.
Li notes that mobile accounted for more than 20 percent of all of those transactions.
For next year, Li sees the mobile checkout experiencing becoming faster, easier and secure along with an increase in mobile wallet usage in the U.S.
Almost all of Alipay’s mobile commerce is in China, though Li says the company is now expanding into the U.S. market so that Chinese travelers can purchase more easily, since they are used to paying with Alipay.
Li says Alipay is targeting early adopters, including small merchants and some large retailers so they can become enabled to accept Alipay payments.
The Alipay model is similar to that of eBay and PayPal, with Alipay essentially playing the role of a payment clearinghouse. Technically, it works something like LevelUp, with the consumer displaying a code via the app to be scanned at checkout.
“In the early days of e-commerce, we became the trusted third party,” says Li. “We hold the money. That is still the model, as the third party.”
As to the difference between the Chinese and U.S. markets, Li notes that consumer logistics and consumer customs play a role.
“In China, it’s more rapidly evolving into omni channel, with a convergence of the online and offline world,” says Li. “It’s more like that in China because traffic is bad and there’s not time to go to a shopping mall.”
The Alipay Wallet app hit about 100 million users in China last month and Li predicts the mobile payments trend will catch on in the U.S. and “challenge existing and new players to come up with products that are friendly to use and transform the way people pay, play, save and communicate.”
A key commerce growth driver will be the expansion of cross-border transactions, says Li, driven by the rise of new, digitally empowered consumers in emerging markets. He suggests that more U.S. businesses will join this marketplace, enabling more consumers to buy directly.
And that could dramatically increase the scope of mobile commerce.