How Chinese Consumers Make Payment Online

Copyright © 2013 All rights reserved CIW

China Internet Watch .com

How Chinese Consumers Make Payment Online

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Copyright © 2013 All rights reserved CIW

China Internet Watch

CONTENT LEVEL:

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Introductory

Copyright © 2013 All rights reserved CIW China Internet Watch

Chinese Online Payment Methods

Chinese online payment methods could be simply divided into three categories: 1. Online banking 2. UnionPay and other 3. Third-Party payment These three kinds of payment methods all accept payment by credit card and debit card.

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Online Banking •  All major banks in China offer online banking service. Card

holders could go to banks to activate online banking service, then they can use online payment via online banking.

•  Online banking is secured by digital certificate, issued by banks. For example, ICBC uses USB-shield as customer certificate. It looks like a U disk and acts as a shield to protect your money while doing online payment. Actually, it is a digital authentication for online banking.

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ICBC USB-shield


ICBC Online Banking

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Click here to log in


ICBC Online Banking

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ICBC Online Banking •  Once you click Personal Banking, you will be linked

to a log in page, there, you can enter your account and password to log in to your online banking. Then you can manage your account, pay for transactions, transfer money and other online banking services.

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UnionPay and Other Third-Party Financial Payment

•  UnionPay is the only interbank network in China, 85 Chinese banks joined UnionPay.

•  UnionPay is much simple than online banking payment. UnionPay doesn’t require opening online bank service, registering procedures are quite easy. Besides, UnionPay also supports multiple payment methods, such as fast payment, online banking, etc.

•  Other third-party financial payment includes ChinaPnR, 99bill and IPS.

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UnionPay Online Payment

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Third-Party Payment •  Alipay, like Paypal, is the biggest third-party online

payment in China which is owned by Alibaba. •  Other third-party payment platforms include

Tenpay, Shengpay, Yeepay,etc. •  Third-party offers a relatively safe payment method

for consumers, because they don’t need to reveal personal banking information to each store where they buy products, instead they just enter the information on a third-party platform.

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Copyright © 2013 All rights reserved CIW China Internet Watch 11

48.7%

20.0%

10.0%

6.8%

6.1%

3.5% 3.0% 2.0%

Alipay

Tenpay

Unionpay

99Bill

chinapnr

yeepay

IPS

other

China Internet Watch Source: iResearch, 2013

Third-Party Payment Statistics China online third-party payment market share updates in Q2 2013 is shown below, Alipay is the market leader with 48.7% share. Followed by Tenpay and Unionpay.


876.11 941.8 1065 1018.13 1121.65

12.9% 7.5%

13.1%

-4.4%

10.2%

91.9%

53.0%

38.9% 31.2% 28.0%

-20.0%

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

0

200

400

600

800

1000

1200

Q2-12 Q3-12 Q4-12 Q1-13 Q2-13e

transaction scale(billion CNY) QoQ Year-on-year increase

China Online Third Party Payment Transaction Scale From Q2 2012-Q2 2013 is shown below. In Q2 2013, the total third-party payment reached 1121 billion yuan(USD 181.9 billion), with a 10.2% QoQ increase.

China Internet Watch Source: iResearch, 2013

Third-Party Payment Statistics


Alipay •  Alipay is connected with Taobao and Tmall, and

other major B2C platforms. •  Most Chinese do their online payment via Alipay.

When they buy a product on Taobao, Tmall or other B2C websites, they could pay via Alipay. Alipay would keep the money until consumer receive the product, then it will transfer the money to the store. If there’s something wrong with the product, consumer could apply to get their money back.

•  Alipay is connected with 14 major banks in China, ICBC, CBC,ABC, BOC, etc.

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Alipay •  Alipay supports all kinds of payment method. 1.  Alipay account money When you have money in your Alipay account, you can pay directly by entering your password. 2. Online Banking Alipay allows you to log in to online banking to finish your payment, now Alipay supports 20 banks in China.

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Alipay 3. Alipay fast payment Alipay fast payment allows users pay quickly without log in to online banks, saving users a lot of time entering bank account and password. Alipay cooperates with 37 banks in China, you can pay via Alipay fast payment without open your online banking service. 4.  Visa/Master Card/JCB Alipay supports Visa, Master Card and JCB payment. These card holders need to enter account name, personal information, and 3D secure password. There are also other payment methods supported by Alipay, including cash on delivery.

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How to Connect Banks to Alipay

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Click here to add a new bank card to Alipay


How to Connect Banks to Alipay

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After clicking on the plus button, you will be linked to a new page like this. Enter your bank account and phone number, you can continue finishing this procedure.


How to Pay Via Alipay ICBC Online Banking

1.  Online Banking Payment via Alipay Once you finish a transaction, you can pay your bill via online banking. First, you can choose a bank, like ICBC, which has been connected to Alipay. Then following below procedures, you can finish the payment linking to ICBC online banking page.

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Choose an online bank to pay, for example ICBC

Click here to continue


Click here to log in to ICBC online bank to continue payment



After clicking the button, you will go to ICBC payment page. Enter your bank account and verification code to continue the payment.



Alipay Fast Payment

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Choose a bank here to continue fast payment


Alipay Fast Payment

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Enter you bank account password here

Click here to confirm the payment

As you can see, fast payment can directly enter password to finish online payment, rather than redirect to an online banking page which requires bank account, verification code and password. Fast payment is more convenient.


Alipay Visa/Master Card Payment

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Click here to choose payment via Visa or Master card

Choose the second option here: pay by credit card



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After clicking, you can choose Visa, Master card or JCB.

Click here to continue



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After entering you credit card information and mailing address, you can click this button to finish your payment


•  Cross-border Website Payment

1. Real time payment solution: Chinese buyers purchase products or services from merchants ’website and make a payment in RMB. Alipay will deduct the payment from the buyers’ account in real-time. 2. Settlement: Alipay collects payment (RMB) from shoppers to BUY foreign currency, and will then remit the sum to receiving bank account of merchants in settlement. At the moment, Alipay support the settlement of 12 foreign currencies.

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How to Integrate Alipay


How to Integrate Alipay-Settlement

1. Coverage: 12 settlement currencies: USD, EUR, JPY, GBP, CAD, AUD, SGD, CHF, SEK, DKK, NOK, HKD 2. BUY foreign currency: After collect payment from buyers’ account instantly, Alipay will buy foreign currency in T+1 day according to spot rate of settlement bank provides. 3. Type of settlement: a) Settlement by turnover: when merchants’ turnover accumulates to 5000USD (lower limit), Alipay will transfer the payments to receiving bank account of merchants immediately. b) Settlement by period: weekly, monthly, quarterly. 4. Settlement bank: Alipay opens 12 foreign currency accounts in Bank of China and China Construction Bank.

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Standard Cost


Requirements 1.Overseas business license and Alipay application form. 2.Shall ensure the reality and validity of application materials. 3.Alipay will audit the application documents.

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Payment Procedures

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Step 1: Consumer places an order on the Merchant’s website and chooses to pay by Alipay Step 2: The consumer logs in to the Alipay account to confirm the payment Step 3: Payment status is communicated in real-time to Merchant and Consumer Step 3: Deliver goods/services Step 4: Funds transferred at T+3 to Merchant. Step 5:Merchant confirms the funds. Step 6: System integrator receives commission.


Conclusion •  In a word, there are three major online payment

methods. Online banking, UnionPay and other third-party financial payment and third-party payment, like Alipay.

•  Online banking is the support of third-party payment. The cooperation with Alipay and other third-party payment platform brings both benefits and threats to banks online service.

•  For Chinese consumers, who do online shopping more and more frequently, third-party payment is both convenient and safe. Alipay is the widely used third-party payment in China.

•  Also, UnionPay is very competitive when it comes to pay phone bills, electricity bills and buy air or train tickets, etc.

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You can contact Incitez for China online payment consultancy services:

[email protected]

How Chinese Consumers Make Payment Online

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