Alipay is pushing into the US (BABA)

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Alibaba-affiliated mobile wallet Alipay partnered with point-of-sale (POS) terminal vendors and processors First Data and Verifone, as it expands its reach into the US, according to Fortune.

The partnership will give Alipay's 450 million active users the ability to use the wallet to pay at select US retailers that offer First Data's Clover mobile point-of-sale (mPOS) and US and European merchants offering Verifone's e355 terminal. This move, which is Alipay's first major foray into the North American market, will ultimately connect Chinese tourists to international merchants. 

Alipay can increase transaction volume and customer loyalty with these partnerships.  

• Chinese tourists like to travel and spend in the US. In 2015, more than 2.5 million Chinese tourists visited the US, and these tourists are expected to spend $40 billion in 2017. Alipay could capture a share of this large market as it offers its users a much more convenient and familiar payment option, rather than having to carry large sums of cash or using high-fee international credit cards when shopping.
• Giving users more options is likely to keep them loyal. China's mobile payments market is heating up as more payment options, such as Apple Pay and Samsung Pay, become available in the country. Alipay is likely to keep a strong hold on its large user base by offering international payment capabilities, especially in the US. An international presence keeps users loyal to Alipay rather than giving them a reason to adopt other mobile wallets. 

These new partnerships could spur adoption of Alipay-capable POS terminals. As more merchants realize that accepting Alipay could increase revenue by attracting the large number of Chinese tourists who would be familiar with Alipay and like to spend, they may look to upgrade their POS systems. This would result in increased customer acquisition for both Verifone and First Data as these merchants leverage this value add. 

Mobile payments are becoming more popular thanks to services such as Alipay, but they still face some high barriers, such as consumers' continued loyalty to traditional payment methods and fragmented acceptance among merchants. But as loyalty programs are integrated and more consumers rely on their mobile wallets for other features like in-app payments, adoption and usage will surge over the next few years.

Evan Bakker, senior research analyst for BI Intelligence, Business Insider's premium research service, has compiled a detailed report on mobile payments that forecasts the growth of in-store mobile payments in the U.S., analyzes the performance of major mobile wallets like Apple Pay, Android Pay, and Samsung Pay, and addresses the barriers holding mobile payments back as well as the benefits that will propel adoption.

Here are some key takeaways from the report:

• In our latest US in-store mobile payments forecast, we find that volume will reach $75 billion this year. We expect volume to pick up significantly by 2020, reaching $503 billion. This reflects a compound annual growth rate (CAGR) of 80% between 2015 and 2020.
• Consumer interest is the primary barrier to mobile payments adoption. Surveys indicate that the issue is less the mobile wallet itself and more that people remain loyal to traditional payment methods and show little enthusiasm for picking up new habits.
• Integrated loyalty programs and other add-on features will be key to mobile wallets taking off. Consumers are showing interest in wallets with integrated loyalty programs. Other potential add-ons, like in-app, in-browser, and P2P payments, will also start fueling adoption. This strategy has been proved successful in China with platforms like WeChat and Alipay.

In full, the report:

• Forecasts the growth of US in-store mobile payments volume and users through 2020.
• Measures mobile wallet user engagement by forecasting mobile payments' share of their annual retail spending.
• Reviews the performance of major mobile wallets like Apple Pay and Samsung Pay.
• Addresses the key barriers that are preventing mobile in-store payments from taking off.
• Identifies the growth drivers that will ultimately carve a path for mainstream adoption.

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1. Subscribe to an ALL-ACCESS Membership with BI Intelligence and gain immediate access to this report AND over 100 other expertly researched deep-dive reports, subscriptions to all of our daily newsletters, and much more. >> START A MEMBERSHIP
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The choice is yours. But however you decide to acquire this report, you’ve given yourself a powerful advantage in your understanding of how mobile payments are rapidly evolving.