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How Chinese Consumers Make Payment Online
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China Internet Watch .com
How Chinese Consumers
Make Payment Online
Version 1
1
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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
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ICBC Online Banking
5
Click here to
log in
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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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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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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.
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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
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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 15
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How to Connect Banks to Alipay
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Click here to add a new bank
card to Alipay
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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.
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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
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Click here to log in to ICBC online bank to
continue payment
How to Pay Via Alipay ICBC Online Banking
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After clicking the button, you will go to ICBC payment page. Enter your
bank account and verification code to continue the payment.
How to Pay Via Alipay ICBC Online Banking
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Alipay Fast Payment
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Choose a bank here to continue fast
payment
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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.
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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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Alipay Visa/Master Card Payment
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After clicking, you can choose Visa, Master
card or JCB.
Click here to continue
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Alipay Visa/Master Card Payment
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After entering you credit card
information and mailing
address, you can click this
button to finish your payment
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• 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
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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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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.
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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:
China.Pay@incitez.com