Alipay, China’s largest online payment provider, today launched a new m-commerce solution that allows consumers to pay for goods and services using their mobile phones at virtually any bricks-and-mortar store.
The product, called Barcode Payment, is a face-to-face payment solution based on the use of ubiquitous bar-code scanners to link mobile phones with merchants’ cash registers. Barcode Payment is being fielded by Alipay as a simpler, less expensive mobile-paymentstechnology than so-called near-field communications (NFC) systems that are being rolled out in China, which require phones to carry special chips so they can communicate with dedicated point-of-sale terminals installed in shops.
Briefly, here’s how Barcode Payment works: When transferring funds to a shop, any consumer with an Alipay account and an Internet-enabled phone equipped with the existing Alipay mobile payments app can launch that app, generating a unique bar code containing account data on the phone’s screen. The merchant, using an ordinary visual scanner, captures the bar code by scanning the phone screen. The data is then relayed to to the merchant’s computer system. The sale (and fund transfer) is completed when the consumer verifies the purchase and the shop owner connects to Alipay on the Internet. Consumers with Alipay-equipped camera phones can also use the system to transfer funds to each other.
Alipay Senior Director Stephen Xu, head of the company’s wireless/mobile payments division, says the system offers greater convenience to consumers, and can be used with a variety of credit and debit cards that are bundled with the user√¢‚Ǩ‚Ñ¢s Alipay account. Transactions are secured by password and standard Internet encryption protocols. If a phone is lost or stolen, a savvy thief could use it to drain an Alipay account up to a maximum of RMB200 transaction limit (larger amounts require a passcode).
Various technologies combining bar codes and mobile phones are being applied elsewhere for marketing, “but for mass-market mobile payments, I believe this is a first,” Xu said.
Alipay is not positioning Barcode Payment as a direct competitor to an NFC network being developed by China UnionPay, a bank card industry association with the backing of the Chinese government. The UnionPay network has an installed base of some 3 million point-of-sale terminals in tens of thousands of larger stores.
Alipay, which hasn’t registered any merchants for the system yet, is going after millions of small shops and convenience stores that may not have the money to install terminals but want to offer consumers the convenience of paying by mobile phone from their Alipay online accounts, Xu said. The only investment needed is in a bar-code scanner, which can cost less than $50–and even a scanner is not essential because micro-merchants can also complete transactions over their own camera phones. There is no charge to register, and the first RMB20,000 in transactions will be completed free per month. After that, Alipay will charge shops a 1% fee for completing transactions.
Xu said Barcode Payment is now available for all smartphones, and a version will soon be available for any Internet-enabled device. The bar-code software will be embedded in the next upgrade of the Alipay mobile payments app.
