China third party payment market report Part 1 – Alipay

No. 1 Alipay

Url: https://www.alipay.com/

1. Brief introduction:

Alipay.com Co.,Ltd (AliPay) is China’s leading online payment service by both number of users and total transaction volume. A member of the Alibaba Group, it enables individuals and businesses to securely, easily and quickly send and receive payments online. AliPay works like an escrow service, solving the issue of settlement risk in China. Since its launch in 2004, AliPay has become the most popular and extensively used online payment tool for all areas of e-commerce in China, and is fast becoming the industry standard. As of 10 May 2009, AliPay had more than 180 million users and a daily transaction volume exceeding RMB700 million, through more than 4,000,000 daily transactions.

2. Features:

1)      Huge users base make Alipay top online payment solution

The huge users base(180 million by May 2009)[1] make Alipay the top online payment option for most sellers and vendors. Users’ payment habit and preference is the No.1 factor that sellers need to consider. Consequently, the more sellers choose to use Alipay as top payment option, the users base will only become larger.

2)      Strong network support

Alipay is owned by Alibaba Inc, this company also own the biggest C2C website(taobao.com) in China, the biggest B2B website(alibaba.com) in the world, the biggest online advertise trade platform(alimama.com), Yahoo China search engine, the biggest classified website and biggest customer review website in China. All the users of this network will use Alipay as defaulted payment option. Considering that, it is not hard to understand ANALYSYS’s presentation in “China third-party market analysis of first quarter, 2009”[2], “Even Though Chinapay has government background, Chinapay is the online presence of China UnionPay(银联),no other online payment service provider has the technology Chinapay has, but, Chinapay can’t reach the market status Alipay does, the reason is Alipay has a strong network support that no other service provider can imagine.[3]

3)      Free

As most Chinese online payment service provider, Alipay is free to receive, send and transfer payment.

4)      Compatibility

As a market leader, Alipay has a good business relationship with major bank, users can use all major bank’s account to deposit money to Alipay, withdraw money from Alipay, or transfer money to the major bank’s account.

5) Market popularity

Buyers love Alipay, so Vendors love Alipay too. According to the statitiscs released on Alipay official blog, more than 460,000 e-commerce companies in China use Alipay as payment option.[4]

3. Users Base:

We will look at the user base from 3 perspective:1) alipay’s statistics; 2) market research firm’s statistics; 3) technical statistics

Alipay Statistics

According to the number released on alipay website, alipay’s users has reached 180 million in May 2009.

Analysys Statistics[5]

According to Analysys, Alipay’s registered users has reached 161 million in the first quarter of 2009, compared with 78 million of Tenpay.

Alexa traffic rank[6]

The traffic of alipay.com rank 1327 globally, the traffic to this website has increased 6.3% during past 3 month[7]. Comparatively, its competitor Tenpay rank 5786 globally, the traffic has decreased 16% in the past 3 month.

Alipay Alex statistics screenshot

Tenpay Alex statistics screenshot

So generally, we think the statistics released on Alipay website(180 million) is reliable and authoritative.

4. Market Share

According to quarterly comparison chart of China major third-party payment companies between Q1 of 2006 to Q1 of 2009 by iresearch[8], Alipay, as market leader, has 51.2% market share in first quarter, 2009, compared of 20.5% market share of Tenpay and 7.6% market share of Chinapay. According to the research result, Alipay’s market share has been maintained more than 50% since Q4, 2007.

5. Growth Rate

According to Alipay official blog, Alipay has 57 million new users in 2008, which means 100% growth rate in user numbers. The average consumption amount per account has increased 32.5%. The new users growth rate in second and third-tier cities has reached 112.23%.[9]

6. Geographics and Democratics of Alipay users

a) International Geographics

According to Alexa, 97.5 users(visitors) of Alipay come from China, only 2.5% visitors come from other country.

b) Domestic Geographics

According to Alipay blog, the growth rate of alipay users in second/three tier cities is 227.88% in 2008, compared with 112.23% growth rate in big cities.[10] That suggest Alibaba are reaching to non-urban residents quickly.

c) Traffic sources

Alexa statistics show that 56.45% visitors come from Taobao.com, besides, 1.35% visitors come from Alimama.com, 1.32% visitors come from yahoo.cn.(all of them are owned by Alibaba Inc) That suggest Alipay’s success is closely related with the strong network support of Alibaba Inc.

Screenshot of Alipay visitors sources by alexa

d) Age of Alipay users

According to the demographics on Alexa, most users age is between 24 to 35(Correspondingly, on alipay official blog, Alipay disclose 83.5% alipay users are between 21 to 35 years old.

Age range for Alipay users, source: Alipay blog

e) Gender of Alipay users

According to Alexa demographics, female users number are much more than male users. [11]That partially should contribute to the fact that female are addicted to online shopping.

f) Education background of Alipay users

According to Alexa demographics, most Alipay users have college education background. So well-educated people tend to use online payment solution Alipay more than other group of people.

7. Future trend

a. Judging from the growth rate in the past few years, and especially the growth rate in remote and rural area(800 million Chinese people are resided in rural area), plus the reasons we mentioned in article 2 of this research, we believe that the growth rate of Alipay users will keep to be at a high level. The industry leader status can’t be touched by any competitor.

b. According to a news report, Chinese Banking Regulatory Commission issued a notice to major banks in China, CBRC urge major bank to pay attention the potential risk of cooperation with third-party payment service provider, the risks include the credit of third party payment companies, internet security and hackers issue, illegal withdrawing cash from credit card, money laundering. CBRC says in the notice that major banks should stop cooperation with third party payment companies when they find risks.

This notice is not mandatory, but it shows online payment market and service provider like Alipay might be affected by regulation and policy.


[1] According to https://www.alipay.com/static/aboutalipay/englishabout.htm

[2] Analysys report “China third party payment market analysis first quarter 2009” can be seen at http://www.enfodesk.com/msite/mainv2/?menu=info_index&sub_menu=info_detail&info_id=12937

[3] According to http://news.ebrun.com/dianshj/2009-06-05/1244180788d159479.html

[4] According to Alipay official blog http://blog.alipay.com/745.html

[5] Analysys report “China third party payment market analysis first quarter 2009” can be seen at http://www.enfodesk.com/msite/mainv2/?menu=info_index&sub_menu=info_detail&info_id=12937

[6] Wikipedia’s definition of Alex http://en.wikipedia.org/wiki/Alexa_Internet

[7] Alipay alexa statistics can be seen at http://www.alexa.com/siteinfo/alipay.com

[8] http://www.iresearch.com.cn/coredata/2009q1.asp

[9] According to Alipay official blog http://www.smarthu.com/Article/news/200903/475.html

[10] According to Alipay official blog at http://www.smarthu.com/Article/news/200903/475.html

[11] According to http://www.alexa.com/siteinfo/alipay.com

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