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How Alibaba Plans to Penetrate the Global Mobile Payment Market

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Alibaba and Tencent control Chinese mobile payment market

China’s mobile payment market has been growing exponentially. Chinese giants Alibaba (BABA) and Tencent (TCEHY) have been responsible for most of the activity and innovation in the mobile payment space in the second-largest economy in the world. 

China’s mobile payment segment tripled to over 38.5 trillion yuan (or ~$5.5 trillion) last year and is forecast to reach 55 trillion yuan (or ~$8 trillion) in 2017, according to Chinese research firm iResearch.

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Alipay, which is owned by e-commerce juggernaut Alibaba, is the leader in the segment. Alipay is followed by Tencent Holdings’ Tenpay, which is attached to the company’s WeChat App. Users can pay for just about everything by using codes generated on smartphones by companies such as Alipay and Tenpay.

Alipay and Tenpay are targeting outbound Chinese tourists

As the chart above shows, Alipay has been losing ground to Tenpay over the last few years. Tenpay has benefited from the popularity of the WeChat App. However, Alipay and Tenpay together have increased their cumulative share in the mobile payment business. More than 90% of total mobile payments in China are generated via Alipay or Tenpay, according to iResearch.

Alipay and Tenpay are now expanding their rivalry onto foreign shores, as they are penetrating new markets through millions of Chinese tourists abroad. According to the World Tourism Organization, there were as many as 135 million Chinese tourists in 2016. However, the litmus test for the two companies is to spread their base to accommodate foreign users, who have many other options.

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