Stripe Integrates Alipay

The Popular bitcoin-accepting mobile payments app Stripe recently opened a private beta program with China’s number one payment processor, Alipay. Effective immediately, merchants around the world who want to sell to the world’s largest e-commerce market with over 350 Million new users, can now do so simply by placing a Stripe payment box on their website, once they are approved for the beta program.

“Checkout now supports Alipay, China’s #1 payment method. Alipay gives you instant access to a vast market. Once you enable Alipay, Checkout will automatically detect Chinese buyers and enable them to pay on web and mobile using instant SMS authentication.”
— – Stripe

Alipay is the number one e-commerce payment system in China with the largest market share of the Chinese mobile payments market, claiming over 82% market share among non-bank processors last year.

As a result, Alipay users can use a popular smartphone app to pay for everyday items, and with over 350 Million active users, a base larger than the entire US population, it is becoming rare to find a Chinese smartphone without the Alipay digital wallet installed on it already.

“We estimate the number of online shoppers [in China] will exceed 660 million by 2023.”
— – Morgan Stanley

Previous rumors suggested that Alipay’s owner Jack Ma, the richest man in China, would be buying Paypal when it was finished splitting from eBay this year. Apparently the opposite has happened, and the result is lifting Stripe up as a direct competitor to PayPal, with access to far more customers in its network.

As of January 2015, there are over 900 million Alipay accounts according to China Sales Co.,  an official global licensed partner and system provider for Alipay. Among these accounts are the 350 million registered users, almost triple the size of its U.S. rival, PayPal.

“Because we are a financial institution, our registered users are different from nonfinancial institutions. We know all of their IDs, their bank account information and have more substantive information than other payments companies.”
— – Jingming Li, president of Alipay’s U.S. parent, Ant Financial Americas

iResearch’s mUser Tracker reported that Alipay had a monthly average of 56.25 million users per day in April 2014, more than double the number of users of all mobile phone banking apps combined, 23.04 million. Moreover, the growth rate of monthly average Alipay daily users often exceeds that of mobile phone banking.

“In 2013, the country racked up $314 billion in online sales, easily surpassing the US, which tallied $255 billion. Globally, China accounted for 35% of eCommerce.”
— – Morgan Stanley

Alipay’s rise to power was due in no small part to being the primary payment option on Alibaba, their Hangzhou-based parent company and the world’s largest e-commerce portal. Many westerners find the vast size of Alibaba surprising, being over three times larger than eBay, and larger than all but six of the S & P fortune 500 companies. Although not popular in the west, the name Alibaba is now synonymous with e-commerce throughout China and other parts of Asia.

“Only recently, the Chinese Ministry of Commerce announced that China’s E-commerce transactions reached 13 trillion yuan ($2.08 trillion) last year. China has now 642 million active Internet users, representing 47 percent of the country’s population, as well as 565 million mobile Internet users, or 41 percent of the population.”
— – iResearch Consulting Group

In much the same way eBay depended on PayPal to process the majority of its sales transactions, Alibaba relies on Alipay for the marketplaces owned by Alibaba’s parent company, the Alibaba group.

Alipay’s popularity is still growing. As more people in Asia who have cellphones start doing mobile payments, Alipay gains more customers and therefore market share.

Alibaba’s mobile Global Merchandise Volume (GMV) is significantly increasing against its non-mobile GMV. This shows that smartphone users of Alibaba have recently become the majority.

“We see the eagerness from Chinese consumers to buy American products. And we see a lot of value in allowing big and small U.S. businesses sell their products to Alipay members. Right now there is a lot of demand, and the US is on the merchant side of things.”
— – Jingming Li, president of Alipay’s U.S. parent, Ant Financial Americas

Although Stripe accepts Bitcoin as a payment option, it is unlikely that bitcoin users will see a  direct effect from the addition of Alipay.

“Stripe can only be used by U.S. merchants who want to be able to accept Alipay payments from Chinese consumers.”
— -Tim Drinan, Communications team at Stripe

As an Asian shopper uses a western e-commerce website, the website will detect their IP address and serve them an Alipay checkout form, all but obscuring the Bitcoin checkout option.

The process doesn’t work in reverse. Even without the IP address detection that triggers the Alipay form, Asian consumers will still have to choose one payment option over another, and Alipay is the one that they’ll most likely have.

“Alipay and Bitcoin are both types of payments that users (merchants) can accept with their Stripe account. So, for example, you couldn’t buy Bitcoin with Alipay through Stripe. Rather, if a merchant has enabled both Alipay and Bitcoin (along with credit cards), when you as a consumer visit the merchant’s website you could choose whether you wanted to pay with Bitcoin, with your Alipay account, or with a standard credit card.”
— – Drinan

At least they have a chance of seeing the bitcoin checkout option. With such large volumes of shoppers possible, that kind of branding exposure might have noticeable effects on bitcoin’s adoption rate.

There are also indirect benefits, as well. Perhaps the largest benefit that Bitcoiners will see from this integration is the likely growth in popularity and power of Stripe. With access to more customers than PayPal has, there is a strong argument to be made that Stripe can displace PayPal in the global payments industry. If it does so, then a bitcoin checkout option will go wherever Stripe’s checkout goes.