The cashless payments movement has a calendar attached to it, at least in China.
Cashless Week in China is little more than a week away — running Aug. 1 through Aug. 8 — as Ant Financial Services Group announced earlier this year. The cash-free week will see the firm encouraging China to embrace digital payments, an offshoot of the company’s goal to make China as cashless as possible in five years — using Alipay as a springboard, of course.
It’s a pretty springy springboard. Alipay boasts a 54 percent market share in third-party online payments as of the end of last year, according to market research firm Analysys.
In a recent interview with PYMNTS’ Karen Webster, Souheil Badran, president at Alipay’s North America division, gave an update on the initiative, including where things are headed for Alipay across borders in August and beyond. The “beyond” entails 90 percent of local businesses across retail, transportation, public services and utilities ultimately “all [becoming] accessible to digital payments,” according to Badran.
Since the Cashless Week initiative was announced in February, Badran said five cities with an aggregate 40 million Chinese consumers have signed up — something, he said, that dovetails well with the 520 million users already on the Alipay app platform.
Badran cautioned that the August event is not a signup campaign, geared simply to bringing merchants or users on board. The march to Cashless Cities week and beyond is one bent on boosting the partnership between merchants and consumers, and a cycle of (digital) wallet usage — moving money between accounts and across credit card transactions, for example — and especially growing higher-end purchases.
The move to cashless in China has already faced some strong tailwinds. The value of smartphone payments in China was worth as much as $5.5 trillion last year, multiples more than the $112 billion worth in the U.S. The digital experience is preferred by the Chinese consumer, too, as a recent study found 63 percent of shoppers prefer commerce to be done in bits and bytes rather than in-store.
That appetite is exportable, too. Cross-border eCommerce purchases are worth around $40 billion, growing at 50 percent annually, according to estimates by global management consulting firm McKinsey and Company. And, noted Badran, the U.S. enjoys in-person commerce as well, with four million visitors annually from China.
But, making the “cashless” transition for those Chinese consumers coming to the U.S. will take a bit of work, Webster and Badranagreed.
From Alipay’s perspective, Badran said the first step is to make Alipay more ubiquitous across all types of merchants and transactions. In a spate of recently forged relationships, Alipay has linked with First Data to gain presence in North America, and Verifone in both North America and Europe. The relationships broaden geographic reach and also enable the QR code scanning, making it possible, then, for Chinese consumers to use their Alipay apps at merchants ranging from Nordstrom’s to the tiniest of pastry shops.