Jack Ma, executive chairman and co-founder of Alibaba Group Holding Ltd., made some noise at a Wall Street Journal Live technology conference last week, where he alluded to a possible tie-up between his Alipay payments service and Apple Pay.
Ma said he’s “very interested” in talking to Apple CEO Tim Cook about a partnership concerning Apple’s new mobile payments service. Cook affirmed interest in the partnership, stating, “we’re going to talk about getting married later this week.” Alibaba affiliate Alipay is China’s largest payments service, while Apple recently debuted its own version of a mobile wallet.
The appeal of this relationship is obvious for both parties, as they attempt to capture a slice of China’s growing e-payments sector. Online third-party payments in China are expected to total 23 trillion yuan ($3.8 trillion) this year, a 35% increase from 2013. Alibaba currently controls roughly 80% of China’s online shopping market (valued at $302 billion), and handles more e-commerce transactions than Amazon and eBay combined.
However, it remains to be seen whether the union will receive the blessing of the Chinese government. Just earlier this year, China’s central bank banned the use of “QR” codes and barcode scans to make payments — which is the system used by Alipay.
Apple faced its own obstacles when an unsettled deal with China’s state-owned UnionPay delayed the Apple Pay feature for consumers on Apple devices sold in China. UnionPay Merchant Services, the online payment arm of China UnionPay, currently has a 40% market share of the online payment market, with Alibaba trailing at second with more than 21%. Any partnership between Apple Pay and Alipay is likely to face regulatory hurdles, especially if it is seen to be diverting transaction revenue from state-owned ventures.
What form this partnership will take is yet to be determined. But investors are already excited by the possibility of wedding bells – Alibaba shares were up 2% in early trading on the day of the conference, with Apple shares also rising by 0.8%.