During the recent YunQi Computing Conference in Shanghai, Alipay, an online payment platform of Alibaba, the world’s seventh-largest Internet company and popular Chinese e-commerce corporation, announced it may supply a cloud service platform based on blockchain technology.
The Hangzhou-based corporation has become increasingly interested in blockchain technology after observing the initiatives of leading financial organizations and institutions such as Nasdaq, which integrated blockchain applications into the conventional finance sector.
The decentralized and transparent Bitcoin blockchain technology enables anyone on the network to send a peer-to-peer transaction, without the involvement of a third-party application. The independence of the network from intermediaries and the traditional financial platform significantly reduces the costs involved in settling transactions and payments for companies like Alipay.
The Value of Stored Credit Information
“If the blockchain will be widely used, with more and more financial institutions and commercial organizations applying the technology, ordinary people will participate, which will lead to the storage of information in it,” said Alibaba Group Vice President and President of Research Institute Gao Hongbing. “The final value of blockchain is the storage of credit information, which is the heart of business and finance. In the past, we obtained this by ranking the companies.”
He further emphasized the significance of big data, and the application of blockchain technology in the field.
“The usage of the blockchain will grow with the transaction records stored in it,” Hongbing said.
Today, Alipay serves more than 350 million registered users and settles more than 80 million transactions per day. The dominant Chinese payment network controls nearly 80 percent of the entire mobile payment provider market in China and supports 109 million active users on its Alipay Wallet platform.
The growth of cloud computing, Internet infrastructure and financial platforms such as Alipay of Alibaba recorded a revenue increase of 128 percent year-on-year during the third quarter of 2015. According to the official financial statement of Alibaba, the company recorded “$289 million in revenue for cloud computing and Internet infrastructure.”
As a response to the growing demand for simple yet robust financial platforms to process and settle cheap payments, Alipay is planning the launch of a Bitcoin blockchain-based cloud payment platform for existing Alipay users.
Growing Demand for Alipay
Over the past year, a growing number of global corporations and conglomerates have begun to offer Alipay to clients as one of their main payment options. The world’s largest airline by number of destinations, United Airlines, for example, announced that the company has officially integrated Alipay into its system due to the growing demand from Chinese citizens, who account for nearly 3 percent of foreign visitors to the United States.
“We are very pleased to partner with United and help them make online booking from China a hassle-free experience,” said Jingming Li, President of Alipay U.S. “By enabling the option to use China’s most trusted and secure payment system, Chinese travelers using United’s website can expect the safe, easy and consistent experience they have come to expect, while avoiding any currency barriers.”
Earlier this month, major Japanese department store chain Kintetsu also announced that the corporation has introduced the Chinese online payment solution in four of its department stores in Osaka.
“Alipay is a payment platform with over 400 million users in China. Chinese customers will be able to use the Alipay app on their cellphones to pay for the commodities they have bought in our department stores, which will be very convenient for them.” said Aki Shokyoku, foreign business director of Abeno Harukas Kintetsu Main Store. “We want to make payment more convenient for Chinese tourists so as to attract more Chinese customers.”
Although Alipay is still unsure whether it will gear toward the integration of the Bitcoin network or the development of its own independent blockchain network, the company’s executives present at the YunQi conference clearly stated that Alipay will most likely introduce a blockchain-backed cloud payment service in 2016.
If the Alipay team successfully integrates Bitcoin into their existing platform, it will immediately enable 400 million users in its system to use Bitcoin in settling international payments and transactions. Arguably, this could be the largest Bitcoin integration by volume to date.