Mobile Payment Alliance
Samsung Electronics will join hands with the world's largest e-commerce giant Alibaba in the mobile payment business.
According to business industry and financial industry sources on May 18, the two companies will announce a “Samsung Pay-Alipay collaboration plan” on mobile payment systems by the end of this week.
Under the tie-up, Samsung Electronics plans to allow its smartphone customers to use Alipay, the online payment platform run by a unit of China’s Alibaba, easily online and offline.
The company released a Samsung Pay service in China at the end of March. Samsung Electronics teamed up with nine major local banks, including Industrial & Commercial Bank of China, China Construction Bank and China Citic Bank, as well as UnionPay, the China’s largest biggest bank card issuers with more than 5.1 billion cards in circulation, at that time.
However, the number of Samsung Pay transactions is lower than expected and it has led to the partnership with Alipay, which ranks first in terms of mobile payment market shares in China, according to industry watchers. A senior official from the business industry said, “Samsung Electronics tried to announce the tie-up with Alipay while preparing the launch of Samsung Pay in March but Chinese regulations became obstacles. The two companies is now about to enter the partnership as Samsung Electronics has rapidly proceeded with collaboration in order to strengthen its Samsung Pay business.”
Some industry experts say that the cooperation of Samsung Pay and Alipay means “the release of the second Samsung Pay.” In other words, Samsung Pay has secured a driving force which will help it dramatically grow in the Chinese market. Alipay had a share of 71 percent in China's mobile payment market in the fourth quarter of last year. If Ali Pay subscribers use Samsung smartphones, Samsung Electronics could have a stronger foothold in the Chinese market. In particular, the company will be able to secure long-term loyal customers by attracting younger consumers who often use mobile payment systems.
At the moment when Samsung Electronics competes with Huawei and Xiaomi in the low-end market with the Galaxy C5 and Galaxy C7 in China, the tie-up will also help with its smartphone business in China.