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Alipay Finds Seat in Starbucks, 10 Months After WeChat Pay

By Coco Feng
Though late to the mobile payment party, 29% of transactions at Starbuck's Chinese stores were conducted through mobile payment platforms in the first quarter of 2017. Photo: Alipay
Though late to the mobile payment party, 29% of transactions at Starbuck's Chinese stores were conducted through mobile payment platforms in the first quarter of 2017. Photo: Alipay

The digital payment turf-war between Alipay and WeChat has come to Starbucks.

All 2,800 of the coffee giant’s China locations now accept Alipay, a payment platform owned by Alibaba-affiliated Ant Financial Services Group.

The move has broken major rival WeChat Pay’s digital-payment monopoly at the popular coffee chain. The Tencent-backed payment tool is embedded in WeChat, China’s dominant messaging app, with nearly 1 billion users. Starbucks in the country have been accepting WeChat Pay since late 2016.

Before this week, Alipay was accepted in only three Starbucks cafes in China – the ones around Alibaba and Alipay headquarters in Hangzhou.

In order to promote its late arrival nationwide, Alipay is launching a three-week campaign of 5-yuan ($0.75) vouchers for any order of 50 yuan or more.

Starbucks itself was late to the new-generation mobile payment world. Most major restaurant chains and even many local eateries in China accept payments via both WeChat Pay and Alipay, which combined control around 90% of the market share.

But it has played catch-up, with 29% of transactions at its China stores made through mobile payment platforms in the first quarter of 2017, Starbucks China CEO Belinda Wong said.

Mobile payment in China has seen significant growth in recent years. In 2016, mobile transactions rose 45% to 158 trillion yuan ($23.9 trillion), according to the central bank.

Alipay and WeChat Pay have also sought to expand overseas. Both debuted in the U.S. earlier this year. Late last year, Alipay announced plans to partner with four financial institutions in Europe – Barclays PLC, BNP Paribas Group, UniCredit SpA and SIX Payment Services Ltd. – to provide payment services at nearly 1 million stores throughout Europe. It also inked deals with Thai payment firm Ascend Money, France’s Ingenico Group, and India’s largest online payment provider, Paytm.

WeChat has set up offices in the U.K. and Italy, and has partnered with Germany’s Wirecard. It provides payment capabilities at stores and malls in countries including Japan, South Korea and Thailand.

Despite these efforts, both companies have had difficulty reaching local consumers in foreign markets, relying mostly on Chinese citizens living and traveling overseas as their main customers.

Contact reporter Coco Feng (renkefeng@caixin.com)

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