Chinese technology companies, once derided as copycats of western innovations, are now creating their own unique products that American tech stalwarts may want (or be forced) to follow. Take Amazon Pay: the tech giant is reportedly trying extend its reach into the offline world. If successful, that strategy would look a lot like what Alibaba accomplished with Alipay in the world’s biggest market for mobile wallets.
Chinese technology companies, once derided as copycats of western innovations, are now creating their own unique products that American tech stalwarts may want (or be forced) to follow. Take Amazon $AMZN Pay: the tech giant is reportedly trying extend its reach into the offline world. If successful, that strategy would look a lot like what Alibaba accomplished with Alipay in the world’s biggest market for mobile wallets.
Amazon’s foray into the payments business, in 2013, wasn’t a booming success, but it’s making a serious push now, according to Bernstein. The Seattle e-commerce company is trying to persuade the likes of gas stations and restaurants in the offline world to accept Amazon Pay, according to a Wall Street Journal report (paywall).
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Earlier payment efforts, like Amazon Register, floundered. And for all of the $800 billion company’s muscle, Amazon Pay is one of the few digital wallets that failed to become more popular among US shoppers this year, according to a Bernstein survey. Amazon Pay has around 33 million users outside of Amazon.com and operates in the US, UK, India, Japan, France, Germany, Italy, and Spain. Amazon as a whole has more than 300 million active users. (PayPal $PYPL has more than 250 million.)
Contrast this with Alipay, which has more than 870 million users around the world (though most are in China). The digital wallet was created in 2004 to provide a payment service for the Amazon-like e-commerce giant Alibaba, a relationship not unlike PayPal’s rise alongside eBay. Alipay launched offline mobile payments via barcodes in 2011, and says it was the first online wallet to market to do so. (PayPal started discussing offline options that year, too.) It now offers a suite of financial services like lending, investment, and insurance.
Amazon hasn’t been able to replicate this success, for a variety of reasons. For one thing, the US already has a highly developed consumer payment market where habits are entrenched. Merchants may also distrust Amazon as a partner, according to Bernstein analyst Harshita Rawat. Since Amazon is seen as a threat to the retail sector, smaller merchants may be reluctant to allow Amazon to have their data or to otherwise depend on its services. Its efforts in the payment arena have also been unfocused and disorganized, Rawat said.
Despite Amazon’s limited success so far, Alipay’s example may provide impetus for Amazon CEO Jeff Bezos to keep trying. Alipay, which now falls under the umbrella of Alibaba affiliate Ant Financial, has become a financial force in its own right, and the company has been making strategic investments and partnerships from Thailand to India.
By all appearances, Amazon is trying hard to push Amazon Pay. The company has launched Amazon Cash, a barcode system for using physical cash to load online accounts with money, and may reportedly include peer-to-peer payments in its Alexa digital assistant system.
If Bezos succeeds in gaining wider adoption of Amazon Pay the US, it may not mean much for Alipay, which is focused on other markets. But PayPal, the original US digital wallet innovator, should be worried.
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