Investment guru Warren Buffett likes to tuck into McDonalds and drinks Coke because he owns them. Apple honcho Tim Cook always uses his company’s products.
But Alibaba founder Jack Ma is different. When he was spotted in a Chongqing pub, Ma was seen paying for his 1,300 yuan (US$201) bill with a credit card instead of using Alipay, according to media reports.
Naturally, the news created a storm on chatrooms in China.
Ma, of course, is certainly one of the 500 million registered users of Alipay. In fact, he is the main reason that China’s online payment platform has become the world’s largest.
Alipay’s parent company Ant Financial is also expected to raise fresh capital in Hong Kong, despite failing in its bid to buy payment firm MoneyGram in the United States after its takeover was blocked by the regulator.
Still, last week, Ma had to apologize to Alipay users for a misleading credit score service on the platform, which involved handing over personal data. Now, there is the credit card controversy.
After the news went viral on social media in China, Alipay was forced to make a statement on Weibo. It said everyone had the right to choose how to pay for services and goods. Individual choices should be respected and that included Alipay staff, it concluded.
Ma is not alone in opting for a credit card instead of an online payment platform. Chan Ka-keung, the former Hong Kong Secretary for Financial Services and the Treasury, defended his decision to use a credit card, saying it was more convenient than a mobile payment platform.
“Hong Kong people like to use Octopus [a pre-paid card] and credit cards,” he said. “I think the card is more convenient and I think many people [here] share that view.”
Hong Kong has been accused of lagging behind China in using mobile payment platforms, largely because of the obsession with credit cards, and the vested interests of financial institutions.
But there is a big difference. China’s largest banknote is just 100 yuan (US$15.4), while debit cards are more common than credit cards on the mainland. This has proved fertile ground for Alipay and rival WePay, the mobile payment arm of Tencent.
Francis Lui Ting-ming, the former economics professor at the Hong Kong University of Science and Technology, joked that even beggars take Alipay in China.
Maybe? But the mobile payment sector on the mainland is certainly a sunrise industry, generating $5 trillion in transactions in 2016, according to data released by Hillhouse Capital last May.
That would have certainly brought a smile to Ma’s face, even if he was holding a credit card at the time.
LOL. Jack Ma is a genius. I’ll bet he wasn’t SEEN using a credit card by accident, but rather BY DESIGN. Why would he want to be seen using a credit card rather than Alipay? There are so many good reasons I will just pick a few off my not-so- genius head.
– There is no need to plug Alipay by himself anymore. Everybody knows it if not using it yet, it will continue to expand. Time to move another step up.
– Alipay is at the right time to add integrated credit card services to its platform for enhanced value-added services to diffrentiated clients for higher profit opportunities. Ali already collect massive user data for credit analysis and is or will be in even better position than banks to offer credit services.
– While they can continue to use Alipay smart phone debit payment feature in emerging economies for expansion, an enhanced payment platform with credit card features will help push Alipay into foreign advanced economies with deep-rooted credit card payment habits and compete against Visa/Mastercard/Amex both on-line and off-line.
– Alibaba is already moving agressively to integrate on-line retail with off-line retail. Integrating debit and credit services with both smart-phone payment and tradictional card payment options definitely makes sense and is much easier to implement in large scale than integrated retail.
– With massive user base, Ali can probably drive cost down and get an advantage competing against deeply established competitors in lucrative foreign markets.
– Expect Tencent/JD to follow suit or even jump ahead with this new trend.