Jan 24, 2025

With its market share shrinking, Alipay is banking on the tap-to-pay feature to reignite growth. When QR codes have become ubiquitous across cities and towns, how can Alipay disrupt the well-established payment system built on this technology? In mid-2024, merchants began noticing Alipay’s push for a new “Tap!” payment method. “Each participating merchant could receive up to RMB 6,000 (USD 840) in monthly subsidies, while promoters earned commissions of RMB 560 (USD 78.4) for each machine installed and merchant signed up—sometimes making up to RMB 1,000 (USD 140) daily,” a service provider told 36Kr. For service providers, bonuses ranged from RMB 100–150 (USD 14–21) per terminal, with activation incentives of RMB 40–80 (USD 5.6–11.2) available for six months. Since its launch on July 8 in cities like Shanghai, Changsha, and Wuhan, “Tap!” has reached over 50 cities in just four months, covering millions of stores. “Alipay seems determined to eliminate QR code payments, and it’s moving fast,” another service provider added. Internally, “Tap!” is considered Alipay’s most significant project of the past two years. Ant Group’s chairman, Eric Jing, initiated discussions in 2023 about creating a payment system more convenient than QR codes, focusing on near-field communication (NFC) technology. By July 2023, the prototype was ready, leading to the official launch a year later. The urgency behind this shift is clear. While Alipay remains the largest third-party payment app in China, its market share has dropped from 80% in 2014 to 55% in 2023, with user growth stalling behind WeChat Pay. Alipay has not disclosed updates to its user data since 2019, when it amassed one billion users. “Alipay has long wanted to promote NFC technology. In the past, it adopted QR codes in response to WeChat Pay. At the time, NFC technology was not widely adopted, but now Alipay clearly wants to reclaim its role as a market leader by innovating in payment methods,” a payment industry employee told 36Kr. In 2023, Alipay introduced a “dual flywheel” strategy to strengthen both its internet platform and payment app capabilities. The company also underwent organizational restructuring, creating two new business groups: the Alipay Business Group, focused on expanding content and commercialization opportunities, and the Digital Payment Business Group, dedicated to payment innovation to reinforce Alipay’s role as a leading payment tool. Users quickly noticed the introduction of Alipay’s tap-to-pay method. Xiao Min, a Changsha resident, discovered the new devices at neighborhood stores like Qiandama, Lingshi Henmang, snack chains, and even hotpot restaurants. Using her Android phone, she found the feature faster than QR code payments. Once permissions were set, she no longer needed to open the Alipay app—simply unlocking her phone and tapping the blue recognition zone triggered a crisp “ding,” with a payment confirmation displayed in less than three seconds. An industry insider told 36Kr that “Tap!” delivers an experience similar to traditional NFC payments while retaining some technical similarities to QR code payments. NFC payments, once considered to have unrealized potential, have been revitalized by Alipay. More than a decade ago, Apple’s attempt to popularize NFC payments stumbled due to high point-of-sale (POS) terminal fees (2–3%) that deterred merchants, along with the limited availability of compatible devices. Today, Alipay’s “Tap!” charges a significantly lower fee of 0.3%, while NFC technology has become more widespread, offering extensive coverage in key cities. In Shanghai, Alipay’s pilot city, “Tap!” has expanded from its debut at Jing’an Joy City to suburban locations like the Huaxin Vegetable Market in the district of Qingpu. In Changsha, the feature is now available across 21 commercial streets and shopping centers, including the International Finance Center (IFC) area and Hisense Plaza. Major chain stores like Meiyijia, 7-Eleven, and Lingshi Henmang, as well as brands like Daiyonghong, have also adopted the devices. The use cases for “Tap!” are broad. For instance, Xiao used it to order food at a hotpot restaurant in Changsha’s IFC area. The process was straightforward, allowing her to place her order and pay without opening separate apps like WeChat or Meituan. “Tap!” users can order food at participating restaurants with just a single phone tap. Photo source: 36Kr. Since QR code payments unified the payment ecosystem, no method has truly been able to challenge their dominance. Even facial recognition payments, already commercially viable for seven years, have struggled to achieve mainstream adoption. Similarly, palm scan payments, introduced by WeChat two years ago, remain limited to niche scenarios such as college campuses. In a cost-conscious era, Alipay’s aggressive promotion of “Tap!” has garnered significant attention. According to 36Kr, Alipay has already invested over RMB 10 billion (USD 1.4 billion) in subsidies and device installations within four months. Internally, the company is reallocating staff to strengthen the project team. Sources indicate that Alipay plans to commit at least RMB 30 billion (USD 4.2 billion) to the initiative’s initial rollout. The new payment method has succeeded in attracting some new users. Joe, a Beijing resident, had previously relied solely on JD.com and Pinduoduo for shopping and WeChat and Meituan for lifestyle services. Having never downloaded Alipay, he was introduced to it by staff at his local Qiandama store, who promoted “Tap!” at every purchase. Alipay’s “Tap!” incorporates gamification features to engage users, similar to other apps. “At first, it felt unfamiliar, but now I use it occasionally because of the discounts—sometimes I can save a few RMB. However, if the staff don’t promote it actively or there’s no significant discount, I still prefer using WeChat’s QR code payment,” Joe said. Interviews with users in Shanghai, Hangzhou, and Changsha reveal that “Tap!” resonates more with Android users, as the feature feels entirely new to them and involves fewer steps than QR code payments. For iOS users, however, reactions have been mixed. Due to Apple’s NFC restrictions, iOS users must open the Alipay app each time, making the process less convenient. “It’s not just a tap—I have to set permissions and manually open the app, which makes it no different from QR code payments,” one user said. Many believe that unless Alipay collaborates with Apple Pay to introduce a virtual card solution, adoption among iOS users will remain limited. “Tap!” represents Alipay’s effort to reclaim a larger share of the offline payment market. While Alipay has thrived in online user conversions through Taobao, it has struggled to differentiate itself offline, where WeChat Pay dominates. Historically, Alipay pioneered barcode and QR code payments a year ahead of WeChat. However, Alibaba lacked a robust mobile app ecosystem at the time. Taobao’s mobile app launched late in 2013, with a full pivot to mobile occurring only in 2014. In contrast, WeChat leveraged its social network and built-in scan feature to penetrate offline scenarios like food orders and ticket verification, riding the wave of mobile-first adoption. As a result, Alipay was forced to shift from being an innovator to a follower. After six months, “Tap!” has gained traction among early adopters, but hurdles remain before it can rival QR code payments. For some users, “Tap!” feels too convenient, raising concerns about control. “With QR code payments, I can review the amount or use biometric options like face or fingerprint recognition. But with ‘Tap!’ I feel less in charge—it feels less secure,” one user told 36Kr. Others worry about accidental payments if their phone is unlocked and inadvertently taps a device. QR codes can also be placed anywhere, allowing customers to scan remotely or pre-pay parking tickets. In contrast, “Tap!” requires physical interaction with a device, creating potential bottlenecks during busy periods. Chain stores and shopping centers are more willing to adopt “Tap!” because it helps integrate users into their membership systems, facilitating private domain operations. However, brands with self-checkout systems, such as Muji and Uniqlo, have yet to adopt the feature. Smaller businesses, like mom-and-pop stores, often lack the resources or interest to promote “Tap!” effectively. Many storeowners accept subsidies but leave the devices idle, failing to encourage customer use. Additionally, “Tap!” requires stable internet connections for both merchants and users, while NFC payments need only the POS terminal to be online. Small shops with unstable networks often experience payment delays. Some users criticize the Alipay app for being overly cluttered. “No app has as many users or as much money flowing through it as Alipay, but when you open the app, you’re bombarded with ads, mini games, and videos—it barely feels like it wants you to use it for offline payments,” a user wrote on Zhihu. In an increasingly bloated app ecosystem, innovative features like “Tap!” may be Alipay’s best shot at reshaping consumer habits and cementing its status as China’s national payment app. KrASIA Connection features translated and adapted content that was originally published by 36Kr. This article was written by Peng Qian for 36Kr. Share