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Alibaba Burns Cash to Attract RMB 500 Million Business Operators

Nov 10, 2018 by Yun Nie
Alibaba Burns Cash to Attract RMB 500 Million Business Operators

Ant Financial (蚂蚁金服), Alibaba’s (阿里巴巴) financial affiliate that operates the leading cashless payment platform Alipay (支付宝), announced that it would spend RMB 500 million (USD 72.5 million) on 50 million Chinese small business operators who use the platform. The company decided to provide digital management tools to small business merchants in the country.

Alipay is one of the world’s largest mobile payment platforms with over 700 million annual active users as of September 2018. Along with Tencent’s (腾讯) WeChat Pay (微信支付), which has 900 million users, the two firms have dominated the Chinese domestic market.

For example, in Fuzhou city of China, approximately 1 million vendors and store operators have utilized Alipay to generate QR code that connected to their credit cards or digital accounts. Consumers pay those sellers by scanning the code in Alipay.

“Over 90% customers in this city use such method to purchase commodities, and more than 95% offline stores support mobile payment,” said Chen Xueying, the researcher of Fuzhou Municipal Bureau of Commerce.

Although the market has already been dominated by Alipay and WeChat Pay, the market is big enough to attract new players. Small businesses have become a new target. Different from the past, the competition between the two companies has expanded from the simple payment to a deeper level of services.

“Small ventures often have unparalleled vitality and creativity. Our QR code acts as a bridge through which those business operators can access to our integrated services, including marketing, loans, financial management, insurance, business analysis and others,” Commented Jing Xiandong (or Eric Jing), the executive chairman and CEO of Ant Financial.

But why small firms are so captivating for the tech mammoth? The answer might be profit. Micro corporations are featured by a large number and wide distribution. According to data released by China’s Central Bank, as of December 2017, the country’s small and medium-sized enterprises (including individual and households-based commerce) accounted for 90% of all market entities, contributing to more than 60% GDP, 50% tax income and 80% employment.

For Alibaba, winning small businesses means that it would take a huge step towards replacing Tencent as China’s biggest mobile payment platform.

To defeat WeChat Pay, Alibaba and Ant Financial signed an agreement with the Fuzhou government to cooperate in e-commerce, online retailers, mobile payment and other sectors in April this year. The Alibaba spin-off also absorbed individual and small enterprises into its ecosystem by proprietary technology.

Jing confirmed that Ant Financial now focuses on developing financial-grade technologies in the blockchain, artificial intelligence (AI), security, Internet of Things (IoT) and computing (BASIC).

“Our AI-driven credit assessment technologies have allowed financial institutions to instantly provide lines of credit to approximately 11 million small businesses in China.” Jing declared at Alibaba’s 2018 Investor Day.

In addition to technology, Alibaba also engaged in promoting its financial capabilities. In May this year, Ant Financial blueprinted a “micro-business development” scheme, which suggests that business operators can obtain loans by using Alipay’s “revenue-based lending” service (the more revenue small ventures generated, the more loans they can obtain from Alibaba-allied financial institutions). Meanwhile, those with high credit would enjoy deposit-free services on the platform.

Ant Financial’s expansion plan has ramped up the rivalry against Tencent-backed WeChat Pay. To striking back, WeChat Pay has expanded from first-tier cities to second- and third-tier cities since July.

The battle now is evolving into an ecosystem confrontation.

Yun Nie

Yun Nie is a New York-based tech reporter. She focuses on India-China financial market, global IT giants and technology-centric market trends. She can be reached at

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