What is Alipay, and how does it work?

Alipay is a mobile payment app that was launched in 2004 for Chinese nationals to make cashless payments. Today, Alipay allows users to make payments for a variety services and products, such as money transfers, online and in-store purchases, and even bill payments.

Just as apps like Venmo and PayPal are popular in the US, Alipay enjoys a similar level of popularity in China. You can download the eWallet service on your mobile and use it to make online payments and transfers.

This article will explore Alipay’s features and provide an overview of the service.

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What is Alipay, and how does it work?

Alipay is an eWallet app that lets users store debit or credit card details to make online and in-store purchases using their phones. It works as a mobile wallet-based payment method, similar to the likes of Apple Pay.

Alipay can be used to make purchases where the merchant has listed Alipay as a valid form of payment.

While the app started with simplified and traditional Chinese, you can also download the Alipay app international, which is designed for users outside Mainland China. This makes it more accessible to native English speakers traveling through China.

The app is free to use, you just need to create an account and add your card details.¹

How do I pay through Alipay?

The Alipay eWallet offers both online and in-store purchases to customers, giving you the flexibility to pay as you prefer.

Online payment

With online payments, it’s as simple as selecting Alipay as your preferred payment method at the checkout page.²

This implies, of course, that the online merchant accepts Alipay, so you should check before you go ahead with the transaction.

In-store payment

Alipay also allows you to pay in-store using your mobile. Payment is simple, and there are two methods.

The merchant-presented mode involves scanning the merchant’s QR code on your phone. You can then enter the payment amount to complete the payment.³

You will often find the merchant QR code next to the tills, or on restaurant tables.

Merchants who join the Alipay network do not need to buy any equipment for collecting payment this way. They simply share their QR code with customers.

The second method is the customer-presented mode. Some merchants may also have Point of Sale systems. In this case, the merchant can scan the payment code presented by the customer to collect the payment.

This method can be faster, as it works well even where there is a weak connection.⁴

Can I use Alipay without a Chinese bank account?

Yes, it is now possible to use Alipay without a Chinese bank account.

Alipay was created with Chinese citizens and businesses in mind. Initially, it was only available to Chinese citizens and residents with a Chinese bank account.

In 2019, customers traveling in China were able to use Alipay’s e-wallet using a 90-day Tour Pass. This was still not an ideal solution for those visiting China for more than 90 days, however.⁵

Since August 2023, foreign visitors can now connect their Alipay accounts with international cards like Visa, Mastercard, Diners Club, Discover, and JCB. This means that visitors can now use Alipay for mobile payments at most merchants across Mainland China. It also allows visitors to use Alipay for a variety of services including subways, buses, taxis, high-speed train tickets, as well as payments in restaurants, supermarkets, hotels, and tourist attractions.⁹

Foreign visitors to China can now spend up to $2,000 a year using Alipay without having to register their ID. Travelers who do register their ID with Alipay can use the app for single-transactions as large as $5,000.⁶

Is Alipay safe?

Alipay is not FDIC insured, which means that any funds you add to your account won’t are lost should the company go out of business.⁷

The mobile payments app does offer several features to ensure your data is safe, and your transactions are secure.⁸

These security features include:

• Advanced encryption - through encryption, Alipay protects your private data, as well as making any payments secure.

• Risk management - Alipay uses a risk management framework to keep fraud attempts at bay and prevent money laundering.

• Real-time Monitoring - Alipay has real-time risk monitoring that uses data to detect a user’s risk level as well as keeping an eye on all payments 24/7.

Pros and considerations of using Alipay

As you might imagine, there are upsides and downsides to using an app like Alipay. Here are some of the commonly-cited pros and cons of Alipay:

Pros of using Alipay

• Can be safer than carrying cash - carrying around a lot of cash on your person abroad is rarely a good idea. With Alipay, you can omit the risk of losing money by having funds in the app.

• Convenient payments - in this digital world, using cash abroad seems unnecessary. That’s why Alipay is a convenient alternative, as it streamlines the process of paying.

• Pay like a local in mainland China - There's no extra set-up needed to enable cross-border payments, so you can pay as easy as at home.

Considerations of using Alipay

• Payments are settled using Alipay+ foreign exchange rates - You may not be getting the mid-market exchange rate (the one you'll find on Google) when making FX transactions.¹⁰

What is the difference between PayPal and Alipay?

PayPal and Alipay are both peer-to-peer payment platforms, but there are some key differences between the two.

Alipay is popular in China and available to Chinese nationals. There was a 'Tour Pass' for those traveling in China, but since August 2023, foreign visitors can now connect their Alipay accounts with international cards and use the Alipay app international.

PayPal is popular and accepted in Europe and the USA. PayPal charges a foreign exchange fee, whereas Alipay only has a transaction fee.

Send Chinese Yuan instantly to Alipay users with Wise

With Wise, you can send your Chinese Yuan (CNY) to Alipay users. All you need is the recipient’s name and Alipay ID to complete the transaction.

You can also receive money through Alipay free of charge when the sender uses Wise to transfer the funds. Check the latest exchange rate for USD to CNY.

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Sources:

All sources checked July 2024.