With Alipay wallet, Alibaba continues with its overseas expansion after striking up a partnership with Octopus Hong Kong. Parker Zheng / China Daily

A giant poster has gone up at MTR Causeway Bay Station proclaiming "Happy shopping in Hong Kong with your Alipay wallet".

It points to the mainland payment company's rapid overseas expansion after embarking on the trail last year.

Nearly 30 merchants, including prominent Hong Kong brands like Chow Tai Fook (jewelry), I.T. (apparel), Optical 88 (glasses) and Broadway (3C products), have teamed up with Alipay for the service enabling businesses equipped with a device to accept payments by scanning QR codes generated by a customer's Alipay wallet app.

The bill charged in Hong Kong dollars will be converted into renminbi based on the daily exchange rate and deducted from a customer's Alipay account.

A source with Alibaba - an associate company of Alipay - said that instead of tapping into the local market, Alipay's foray in Hong Kong is aimed at serving mainland tourists who are regular spenders in the city.

"Overseas travel is becoming increasingly popular among mainland people whose spending power is on the rise," the source said. "The Alipay wallet has a similar strategic layout in other popular tourist destinations in the region, like Thailand and South Korea."

But, due to local regulators' currency controls, Alipay cannot charge a customer with Hong Kong currency through the mobile payment tool. Therefore, it restricts its overseas expansion - the mobile payment tool is not accessible for Hong Kong residents with Alipay accounts.

The only way for Hong Kong residents to use Alipay at present is via online shopping with mainland e-commerce platforms, such as Taobao.com, by using their credit cards if they don't have debit cards issued by mainland commercial banks. But, they will have to pay a further 3 percent as service charge.

A Master Card investigation shows that sales linked to mainland cross-border online shopping hit 18 billion yuan ($2.9 billion) in 2012, and it expects the figure to soar to 50 billion yuan this year.

At present, only debit cards issued by mainland commercial banks could be linked to the Alipay account. Credit cards issued by both mainland and foreign banks can only support direct payment for deals without the function of recharging the Alipay account.

"Of course, Hong Kong residents would prefer to pay directly by credit card instead of the Alipay wallet app, but only if the latter method involves no extra fees," the Alibaba source said.

Alipay announced in January last year that the Alipay wallet will be available for mobile payments in Hong Kong and Taiwan, and in South Korea later.

Since then, 336 OK convenience stores, 90 Bonjour cosmetics stores and 10 Giordano apparel outlets in Hong Kong have joined the Alipay wallet payment service.

Liang Mingjun, Alipay's director for small and micro financial service international business unit, said when Chinese mainland tourists travel to Hong Kong, they will be able to use the Alipay wallet payment service.

However, shopkeepers at OK convenience stores interviewed in Hong Kong recently said: "There have been very few mainland consumers who offer to pay through the Alipay wallet since the service was launched."

The number of real-name, mainland registered users of Alipay has reached 300 million, including 190 million who are also active users of the offline payment tool, Alipay wallet.

As cross-border travel intensifies, Alipay has decided to enhance the mobile payment service and provide rapid tax reimbursement services in overseas consumption experience in order to consolidate the existing customer base.

Some 26 merchants, which have accepted the Alipay wallet payment in Hong Kong, will launch promotion activities, such as providing allowance or discounts for consumers, during the coming Spring Festival.

In the past year, Alipay has been cooperating with mainland tourism companies, such as outbound travel site Qyer.com, saying that mainland tourists who scan the QR codes on the website homepage with the Alipay wallet mobile app would directly get 18 yuan in their Alipay accounts, after which they can use it at OK convenience stores in Hong Kong.

When directly using the Alipay wallet at Hong Kong OK convenience stores, it's also possible for mainland tourists to get a cashback of up to 200 yuan at a time, with a total upper limit of 1 million yuan, namely the red packets given out by Alipay.

gladdy@chinadailyhk.com

(HK Edition 01/29/2015 page8)