The mobile payment app Alipay already enables almost total cashless living in China, and is now making inroads in Europe too. We got in touch with AliPay and Barclaycard to understand more about what their recent partnership means for stores – this is still currently unfolding and it may take a while before all the details are clear. In this article find out what AliPay is, how it works, and how to use it in your UK store.
What is Alipay?
Alipay is a system of mobile payments which uses QR codes.
There is no Western payments system to which Alipay is rigorously comparable. The payment type is digital wallet. Like Apple Wallet, users set up an “eWallet” or “digital wallet” and can add credit cards to it. Like PayPal, users can add balance directly to their Alipay account. Unlike either, Alipay uses QR codes at the counter in order to pay.
Both Alipay and its competitor WechatPay have become hubs where users can just log in to one app to manage every part of their daily lives – like Facebook, but wider-ranging. You can schedule a Doctor’s appointment, a taxi, or do any number of other things via the app.
What are QR codes?
A QR code or “quick response” code is a digital image resembling a jumbled black and white chessboard. It’s made up of a specific sequence of squares which can be read by an imaging device, such as a camera or a “2D scanner”. A QR code is a bit like a barcode – but it can hold hundreds of times more information, including in a wider variety of formats.
AliPay in the UK
In March last year, Barclaycard – which processes nearly half of the UK’s credit and debit transactions – announced its partnership with Alipay.
By developing a new API, Barclaycard will allow UK retailers to accept Alipay payments in store without adding new tools to their existing EPOS system. The deal was made after a successful two-year pilot, where Barclaycard had tested the POS solution in 8 retailers.
This means that Chinese visitors will be able to come to the UK and shop via the mobile payment app that they are already familiar with. The move recognises how “Chinese tourists represent an important growth opportunity for British retailers,” says Barclaycard.
You don’t need a particular POS system to use AliPay – you can use your existing POS. May from AliPay’s Global Business Support Team tells StoreKit:
Global Alipay supports Chinese buyers in purchasing goods and/or services on overseas merchants’ websites, apps, or physical stores. Alipay will deduct the amount of a payment from the buyer’s Alipay account in CNY (Chinese Yuan) and settle the payment in a foreign currency to the merchant’s overseas bank account.
That means the merchant won’t necessarily need to have an AliPay account themselves. If you want to integrate AliPay services in your physical or online store, you go through a third party payment service provider (an acquirer).
At the moment, there are two acquirers in the UK who work with AliPay:
We don’t yet know what this will look like on your EPOS, and what processing rates you’ll pay. Unfortunately we’ve not had an in-depth response back from AliPay or Barclaycard to our queries. When we do, we’ll be sure to update this page – so watch this space.
How do I use AliPay in my store?
A merchant who accepts AliPay payments in-store can accept money from an AliPay eWallet holder in 3 ways:
1. The cashier tells the customer how much they need to pay. The customer then uses their AliPay app to scan the merchant’s unique QR code. They type in the amount to be paid on their app, authorise the payment with a password (PIN or touch ID) and the money will go to the merchant’s AliPay account.
2. The cashier enters the amount into their POS terminal which then displays a unique QR code for that specific transaction. The merchant creates a dynamic QR code for the payment amount. The Alipay eWallet holder scans the QR code using the Alipay app, and pays for the exact amount. The payment is only completed if the customer authenticates the transaction in their mobile app.
3. Using a barcode scanner. The merchant enters the amount of the transaction into their POS, then requests the customer to display their unique Alipay QR code in their eWallet. The merchant, on scanning the holder’s QR code, makes a request to Alipay to authorise the payment to be made from the customer’s eWallet to the merchant’s Alipay account. After scanning the code, Alipay will inform the merchant and customer of the payment result. The transaction amount will be paid to the merchant’s bank card within the agreed period. As AliPay informs us, “the merchant Alipay account does not support topping-up, transfers, or withdrawals.”
Good news! The new agreement lets Barclays’ entire network of 11,000 merchants to accept in-store Alipay payments without replacing their existing point-of-sale system. At the moment it’s only Barclaycard in the UK that have partnered up with AliPay, and if you use Worldpay or some other acquirer, you won’t currently be able to accept Alipay in the UK.
So, if you’re a retailer who uses Barclaycard services, and you’re interested in accepting AliPay, you won’t need a complete overhaul of your EPOS system – you won’t need additional tools.
“In order to activate the new Alipay functionality, Barclaycard has created an API which retailers can share with their point-of-sale (POS) software supplier to facilitate integration into the POS system”, says Barclaycard.
Your business will be able to share a new API with their EPOS software that upgrades your EPOS system to enable AliPay payments.
You can use a barcode reader or POS terminal that can scan QR codes. Or, if you don’t have one, a Smartphone that scans QR codes will work. Both iPhones and Android smartphones can scan QR codes through the in-built camera (make sure your iOS and Android software is up to date). The app displays a unique QR code identifying the AliPay wallet holder’s card details. You simply point your camera towards the QR code, which will instantly recognise it and come up with a push notification requiring you tap it to complete. QR codes can be scanned from any direction. Both you and the customer need to be connected to the internet.
What are my options if I don’t operate with Barclaycard?
You can also integrate the Alipay feature using a payments solution, like Stripe, and you don’t need to apply directly to AliPay as Stripe handles everything. If you’re an online store, you can accept AliPay as long as your payment gateway supports it. For example, Stripe enables online payments via AliPay. Stripe is a Payment Service Provider, a system or payment gateway that allows merchants to receive money from customers online (but that money is first held by Stripe for 7 days in order to protect both company and customer from fraud). The global acquirer for online and POS payments, Adyen, can take WeChat and Alipay QR codes both online and in-store.
Another benefit of Alipay lies in the reduced risk of fraud: payments are authenticated with the customer’s login credentials and dispute rates are very low.
In London, several shops in the Kensington area have rolled out AliPay acceptance by working with payment service company SafeCharge. Gateway systems that enable payments through apps like AliPay “can be implemented quickly system-wide, often in a matter of a couple of weeks”.
How do QR payments work?
QR codes can hold masses of data – the more squares you see on the code, the greater the volume of information it contains. They can also still be read even if part of the code is damaged. When a QR code is scanned, the pattern of the image is decoded by the software on your smartphone and converted into a sequence of characters. After this happens, and depending on this sequence, your phone may open a link in your browser, confirm payment details, verify geolocation, among other operations.
What are the benefits of QR codes?
Cheaper than checking out contactless
Low cost installation
Instead of installing a contactless card reader or upgrading their POS terminal to accept NFC payments, which can be a heavy investment, merchants can just be paid via mobile apps (where money can be stored).
Unlike the traditional linear barcodes that can only be scanned by a laser barcode scanner from paper, QR codes can be read from both paper and screens.
Why should I accept AliPay payments on my POS?
AliPay was the world’s most popular app in 2019, outside of social apps – according to App Annie. On top of the UK’s 393,000 Chinese residents and 95,000 Chinese students, tourists from China represent an ever-growing group of customers that are liberal when it comes to spending (an estimated £1 billion was spent by Chinese in the UK alone last year). Alipay’s in-store payment service covers over 50 countries and regions worldwide. The platform also works with over 250 overseas financial institutions and payment solution providers to enable cross-border payments. It currently supports 27 currencies.
That being said, unlike in China, mobile app payments are not massive in the UK right now. Mobile payments took off in China partly because credit cards didn’t make it into the mainstream anyway. Our banking systems have evolved at a completely different pace to Asia and Africa, where mobile apps effectively replaced cash payments for P2P and small business transactions.
In Europe, QR codes are more often used for accessing sites or information quickly, like on tour guides. So it may not be worth it if you’re a small business, given that the vast majority of UK customers prefer contactless or NFC payments. However, with a growing sector of customers coming from China, it’s also wise to look ahead and prepare your business to cash in on these buyers. It may encourage them to buy more too, by allowing for a smoother transaction that they are more comfortable with.
Marketing advantages (of apps)
AliPay users can discover businesses (like yours) simply by walking down the high street and checking out their app.
“A lot of times people who use [Alipay] trust the businesses that are on it, and the payment is secure, seamless, one that they’re familiar with,” said Bob Partrite, chief operating officer at Simco restaurants at Pier 39.
So it pays to be on the platform.
The Starbucks mobile app was the most popular mobile payments platform and loyalty rewards app in the US in 2018. Users can use geolocation services to see the nearest Starbucks, order ahead and pick up in store, see new products and even make a Spotify playlist.
With 23.4 million users, Starbucks beats second-placed Apple Pay (22 million). The coffee business is trying to – like AliPay – integrate with other platforms and services, offering users the convenience of using one application. There are marketing advantages for retailers. Activating AliPay connects you to the many AliPay users in Europe who will be searching for stores nearby, and finding out details such as opening hours and whether there are any discounts available.
Interested in the ability to take mobile and card payments but don’t yet have an EPOS system in your business? Whether you want Software as a Service or you prefer to buy outright, drop us a line and we’ll be happy to run you through your options.