What is Alipay? A thorough explanation of the benefits of implementation, how payment works, and how it differs from Alipay+

With the dramatic recovery of inbound tourists and the rapid spread of "cross-border e-commerce," which sells products across borders, expanding the "payment method that overseas end users are familiar with daily use" has become an unavoidable and most critical issue for Japanese businesses. Among these, the infrastructure of payments essential for targeting the huge Chinese market and the Asian region is Alipay (Alipay/Alipay).

In this article, payment experts thoroughly explain the basic system and benefits of Alipay for e-commerce businesses and accounting and payment staff, the differences from the latest global network "Alipay+," and even the practical implementation workflow using payment processing company companies (PSPs).

PG Multi-Payment Service, Alipay is currently available only in a test environment. The timing of use in the production environment is still being adjusted.

What is Alipay? One of Asia's largest infrastructure of payments

Alipay is one of the world's largest digital payment lifestyle platforms, provided by Alibaba Group, a major Chinese technology company. In China, it has become a super app deeply embedded in every aspect of life, far beyond being a simple "smartphone payment app," from utility charge payment, ticket reservations, assets operations, insurance purchases, to public transportation.

Overwhelming user base and market share

Alipay's biggest feature is its exceptionally large user base. With over 1 billion active users worldwide, it boasts an overwhelming market share in China's mobile payment market, with WeChat Pay, operated by Tencent Group, taking up half or even more of the market. For Chinese end users, owning and using Alipay is a daily prerequisite, and in the country, where credit card penetration rate is low, it has become the most important infrastructure of payments.

Therefore, when Japanese businesses implement inbound measures or cross-border e-commerce, whether they support Alipay is a decisive turning point that affects the end user's "purchase intent" and the site's "conversion rate (CVR)."

Differences between "Alipay" and "Alipay+" that are easily confused

In recent years, as you consider introducing payment for overseas markets, you may be hearing the term "Alipay+" more and more. Many payment representatives wonder, "What makes it different from regular Alipay?" so here we will clearly organize the differences.

As mentioned above, Alipay+ refers to a "cross-border payment solution" that leverages Alipay's foundational technology to connect diverse local digital wallets across Asian countries through a single interface.

When Japanese businesses implement payment systems compatible with Alipay+, not only Chinese Alipay users but also end users across Asia can use the payment app daily for payment in stores and e-commerce sites. If you want to expand your global strategy more broadly, considering implementation within the Alipay+ framework is the current trend and a highly effective approach.

Alipay's payment system differs between online and offline

Alipay's payment varies depending on the business model of the business (whether it's online like an e-commerce site or offline like a physical store), and the payment flow and technology used differs. We will explain how each mechanism works.

"〇〇Pay / ID payment" on e-commerce sites and online services

When using Alipay for cross-border e-commerce sites, digital content, or online reservation services, the system applies the "ID payment (〇〇Pay / ID payment)" system.

1. On the e-commerce site's checkout screen, the end user selects "Alipay" as the payment method.
2. For PC sites, a QR code for payment appears on the screen, and the end user scans it with their smartphone. If accessing via a smartphone browser or app, the Alipay app will automatically launch seamlessly.
3. End users can check the payment amount in the app, enter a password, or perform biometric authentication (fingerprint or facial recognition), completing the payment instantly on the spot.

Unlike credit cards, where you don't need to enter a "16-digit number" or "expiration date" on overseas sites, it lowers the psychological barriers for end users' security.

QR payment in physical stores and face-to-face business

When introducing Alipay at physical stores such as commercial facilities, restaurants, or tourist spots, it uses a smartphone screen called "QR payment." There are two main methods for this:

• User Scan Method (Store-Presented / MPM): The store displays a dedicated QR code (such as a sticker or desktop POP) next to the register, and the end user scans it with their own app and enters the amount themselves to payment. Since no dedicated device is required, it offers the advantage of easy implementation with low initial costs.
  
  
• Store Scan Method (Customer Presentation / CPM): The end user displays a payment barcode or QR code on the Alipay app on their smartphone, and the store reads it using a barcode reader at the POS register or a dedicated payment terminal. Because registers can be operated quickly, they are ideal for fast-paced sites such as convenience stores and drugstores.

Four Decisive Benefits Japanese Companies Should Adopt Alipay

As payment experts, we explain why businesses should add Alipay (or Alipay+) to their payment lineup, along with specific benefits.

1. Prevent overseas end users from abandoning their carts and maximize CVR

One common concern for many businesses when running an e-commerce site is 'cart abandonment,' where they give up on purchasing while adding items to their cart. One of the biggest causes of cart abandonment is that there are no payment method you want to use. Especially end users in China and Asia rely on digital wallets for their daily payment, so they are highly likely to leave e-commerce sites that only offer Credit card payment. By implementing Alipay, you can enhance the payment experience for these overseas customers and lead to reliable conversions.

2. Reliable sales recovery in Japanese yen denominated by minimizing exchange rate risk

The biggest concerns for accounting and finance staff are probably the "foreign currency-denominated payment exchange rate fluctuation risk" and "complex accounting treatment." There are many cases where people worry about "losing money due to fluctuations in the RMB exchange rate" or "do I have to open a foreign currency account?"

However, if you introduce Alipay through a Japanese payment processing company company (PSP), these risks are completely eliminated. End users shop in local currencies (such as RMB), and sales are deposited to the business in Japanese yen based on the exchange rate at the moment the payment is confirmed. Therefore, by minimizing exchange rate risk, you can manage and clear sales stably in Japanese yen, just like other domestic payment method.

3. Gaining Huge Purchasing Power from Inbound Tourists and Cross-Border E-commerce

End users using Alipay tend to have a very high desire to purchase Japanese products. Not only are there "binge buying" on e-commerce sites, but the purchase price at physical stores during visits to Japan is often higher than that of the general domestic customer base. Furthermore, the Alipay app includes marketing features such as issuing coupons for nearby merchants and searching for store information, so introducing it itself serves as a powerful tool for attracting customers and increasing awareness.

4. Centralized management with other payment method, without increasing the burden on accounting and payment staff

If the management screen and payment cycle become fragmented every time the payment method increases, the operations of the accounting department responsible for actual tasks collapse. However, by implementing through the services of payment processing company companies (PSPs), sales data, closing dates, and payment dates can be fully centralized into a single management dashboard, including Credit card payment and various domestic Pay payments. This enables 'proactive management' by responding globally while minimizing practical workload.

Practical Points and Precautions Responsible for Accounting and payment Staff Should Know

As we proceed with the implementation of Alipay in detail, we will organize practical points that company payment and accounting staff should understand in advance.

Fee structure and review process

Implementing Alipay generally requires initial costs, monthly fixed fees, and a "payment fee" charged per payment. Since commission rates vary depending on the volume handled by the business operator, the industry, and the products being sold, it is essential to obtain an accurate quote from the payment processing company company (PSP) in advance.

There are also specified merchant screening for implementation. For cross-border e-commerce, strict checks are conducted to ensure that the products handled do not violate import regulations within China or Alipay's terms, and whether the authenticity of physical stores can be verified. Since the review period can take from several weeks to about a month, it is important to apply with some flexibility by working backward from the schedule of promotions and site launches.

Security and fraud (chargeback) Measures

Alipay is a payment system with an extremely low risk of third-party fraud compared to Credit card payment, since the end user launches the app and performs the payment through authentication (two-factor authentication or biometric verification). By reducing the risk of chargeback due to fraud, which frequently occurs in Credit card payment, businesses can maintain a highly secure transaction with a hidden advantage.

A Roadmap for Fail-Free Alipay Implementation: Criteria for Selecting payment processing company Companies (PSPs)

To effectively integrate Alipay into your business, the key to success is "how you contract and integrate the system."

The hurdles of direct contract and the need for payment processing company companies (PSPs)

Establishing a direct contract with the local subsidiary that provides Alipay involves language barriers, compliance with local laws and regulations, reading system specifications, and even clearing transactions in foreign currency, which involves enormous workload and risks for domestic Japanese businesses. Therefore, in the domestic market, the most reliable and standard route is to contract and implement through a payment processing company company (PSP) with a Actual. By using a PSP, you can complete the procedure with the support of Japanese and with the same ease as domestic payment.

Reasons to choose "Online Payment Service"

When selecting a payment processing company company (PSP), you should not just choose one that handles Alipay exclusively, but also one that operates a "Online Payment Service" covering major domestic and international payment method. By integrating systems using a single API or development kit, you can comprehensively implement not only Alipay but also major credit card brands, CVS Payment, buy now pay later payment, and even various domestic QR payment. Not only can you dramatically reduce the man-hours of system development, but you will also have a robust architecture that can flexibly support future payment method expansions.

For optimizing payment and maximizing sales, GMO Payment Gateway is the way to go.

As a leading company in payment processing industry, we at GMO Payment Gateway have continuously supported the growth of Japan's e-commerce market from both system and operational perspectives.

Beyond simply providing a "payment system," we support business global expansion as a specialized partner by offering data-driven payment strategies tailored to your business needs and target countries, as well as optimized payment experiences to minimize cart abandonment.

If you are considering implementing Alipay to capture inbound demand or expand sales in cross-border e-commerce business, please feel free to contact our Actual extensive GMO payment gateway. We will propose the best plan for your company's business phase.

PG Multi-Payment Service, Alipay is currently available only in a test environment. The timing of use in the production environment is still being adjusted.