China’s tech giants, Alibaba, Tencent and Baidoo, have successfully expanded into financial services, especially in the payments area with Alipay and WeChat. Alipay is a worldwide leading payment platform. First launched in 2004, it soon evolved from a simple digital wallet to a so-called lifestyle enabler. It is Ant Financials’ main business and has more than one billion active users. Users can book a taxi or hotel room, buy movie tickets, pay utility bills, make appointments with doctors, or purchase wealth management products directly within the Alipay app. Alipay is currently expanding to offer in-store offline payments, both inside and outside of China. Alipay collaborates with more than 450 financial institutions and payment solution providers, both domestic and overseas, in its effort to expand globally.
The Alipay payment process can be differentiated between mobile payments and web payments. In the case of mobile payments, the customer initiates the checkout procedure in the merchant app by choosing Alipay as the payment method. The merchant app then sends a transaction request to Alipay, which in turn forwards a payment link to the merchant app. The merchant app processes the payment link, and the Alipay app automatically opens for the customer. This all happens on the backend in just a few seconds from when the customer chooses Alipay as their payment method. The customer then has the opportunity to review the transaction details again. If they agree, they enter their PIN or identify themself via touch ID to approve the payment. Afterwards, the payment will be completed and the customer will be redirected to a payment success page.
In the case of a web payment, the customer checks out on the merchant's website and selects payment via Alipay. As before, the merchant's system sends a transaction request to Alipay, but unlike mobile payment, the merchant receives a QR code which includes the payment details. The merchant presents the QR code to the customer, who scans it. The customer is then shown all transaction details displayed on their screen. By entering a PIN or using another authentication method, the payment is confirmed and carried out. Finally, the customer is redirected to a payment success page.
The QR code method of payment also works as an offline instant payment solution for in-store checkout. In this method, merchants are able to collect money by scanning the QR code displayed in a customer’s Alipay Wallet app. The process starts with the customer opening the Alipay app and generating a QR code. This Alipay barcode or QR code is then shown at checkout when making a purchase. The cashier scans the customer’s Alipay barcode or QR code to initiate a payment request. The payment request is then sent to the merchant’s backend system and transmitted to Alipay for further processing. In the last step, Alipay processes the payment request in real time and sends a payment notification to the customer and merchant informing both parties if the transaction was successful.
The videos explain different fintech business models and refer to the book Fintech Business Models by Matthias Fischer published in February 2021.
The channel covers fintechs in the area of payments, robo advisory, Personal Finance Management, crowdfunding, artificial intelligence, blockchain, cryptocurrency and innovative digital solutions in banking.