June 24, 2024, 2:37 pm | Read time: 6 minutes
AliExpress, Alibaba, and perhaps Alipay are terms most people have heard at least in passing. But those who have watched a European Championship game in recent days likely noticed the large advertising banners along the field. Not only were the logos of Deutsche Bahn, Lidl, and Booking.com displayed, but Alipay and Alipay+ were also advertised. So, what is behind the Chinese payment system and its marketing strategy?
What Can the Chinese Service Do?
Alipay, along with its app, is operated by the Ant Group, a subsidiary of the Chinese conglomerate Alibaba. In 2004, Chinese entrepreneur Jack Ma founded Alipay with the goal of creating a unified online payment system. At that time, there were no cross-bank standards for online payments in China, so Alipay filled a significant market gap.
Additionally, the system served as a security guarantee in online commerce: The buyer first transferred the money to Alipay, but Alipay only paid the seller once the goods had arrived at the buyer’s location. Today, Alipay is one of the most widely used third-party online payment providers in both the Chinese market and globally, alongside services like PayPal and Klarna.
Besides online payments, Alipay also enables smartphone payments. The process is simple: You link your bank account or credit card to Alipay. At the checkout, the app scans a QR code to make the payment. The advantage of this method is that smartphones do not need to be NFC-capable, allowing even older models to use Alipay, and the method gained traction before NFC became standard in smartphones.
Synergy Effects with AliExpress
Alipay is still primarily used within China, but the Ant Group is working to expand into foreign markets, primarily in Southeast Asia. This follows the expansion trend of its parent company Alibaba, which includes Alipay, Alipay+, and AliExpress. The latter is an online marketplace where Chinese merchants offer their goods globally. Similar to the Chinese online marketplace Temu, AliExpress is also very popular in Germany. Products are offered at extremely low prices, with endless discounts. However, consumer protection agencies frequently criticize the safety, quality, and sustainability of the products, as well as customer protection.
While AliExpress targets end customers–private consumers–alibaba.com is aimed at business customers. Alibaba.com is also an online marketplace. Unlike Amazon, alibaba.com and AliExpress do not produce or sell their own products but merely provide the platform for buyers and sellers. Products on Alibaba.com are specifically offered for other businesses, meaning in large quantities and at particularly low prices. Payments can be made on both platforms using Alipay.
An International Interface
Not only was Alipay advertised during the 2024 European Championship, but also Alipay+. While the former is the payment service including the app, the latter is the interface between the payment system, customers, and merchants. Alipay+ was introduced in 2020 by the Ant International Group to allow foreign customers to continue using their home apps to pay in China. Conversely, Alipay+ also works the other way: German merchants who equipped themselves with Alipay+ in preparation for the European Championship could thus accept payments from Chinese tourists using the Alipay app. This eliminates complicated currency exchanges and the need to sign up for new payment services and their respective apps.
The spread of Alipay+ among merchants is the prerequisite for the global expansion of Alipay. Therefore, Ant Group’s senior vice president Douglas Feagin told “CNBC“: “We see enormous expansion opportunities, and the relatively broad coverage we have in Asia, we would like to replicate in countries like the Middle East, Latin America, and Europe.” According to Ant Group, Alipay+ already connects 88 million merchants with 1.5 billion customers. Alipay+ is now available in 57 countries and regions and supports over 25 e-wallets and banking apps. Could the Chinese service soon establish itself in Germany and Europe?
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Alipay at the European Football Championship
In the case of the 2024 European Championship, Alipay is acting as a sponsor and investing 200 million euros. The fact that the Chinese company advertises its products at the European Championship and other international sporting events raises the question of why. The answers are varied. On one hand, soccer is becoming increasingly popular among the educated Chinese middle class, an important target group for Alipay. Thus, the advertising played in German stadiums is directly aimed at Chinese TV viewers.
At the same time, Chinese advertising in general is a geopolitical strategy with both internal and external effects. Using the example of the European Championship, China can present itself as internationally visible and relevant to Chinese viewers–even without participating in the actual sporting event. To the rest of the international audience, China can present itself as a legitimate state and economic partner.
The advertising for Alipay in particular also has the potential to improve the payment service’s image. Data protection advocates, including Ulrich Kühn, the deputy data protection officer of Hamburg, sharply criticize Alipay’s data protection standards. In principle, security authorities in China have “extensive access rights to all communication interfaces operated by companies there,” as Kühn told “ZDFheute.” To what extent the data of European customers is collected and evaluated is unclear, but it must be accepted when using Alipay.
Is Alipay Coming to Germany?
Ultimately, Alipay has invested a lot of money in advertising during the European Championship and has also cooperated with savings banks and card reader manufacturer Nexi to spread Alipay+ among local merchants. About 4,000 merchants in Germany now accept Alipay as a payment method. These include DM, Rossmann, and Aldi Süd.
Sven Korschinowski, managing director of the DSV Group (savings banks), said regarding the cooperation ahead of the European Championship to “Payment & Banking“: “We primarily wanted to enable as many merchants as possible to accept payments from Asian soccer fans in the stadiums and fan zones, and I believe we have reached a good number.”
Is this the starting signal for more Alipay in Germany? Perhaps the acceptance of Alipay among merchants will increase through Alipay+ to offer Asian customers a convenient payment option. However, it is unlikely that German consumers will switch to Alipay in the future. On one hand, some German banks, including savings banks, are working on a European, unified, and secure payment service called Wero. Chinese competition would therefore not be welcome. On the other hand, there are already enough payment services like PayPal, Klarna, Apple Pay, Amazon Pay, and others–in addition to the still very popular and very German solutions of EC cards and cash.