Alipay gains foothold here

By Chung Ah-young

Alipay, China’s most popular online payment provider, will be able to expand its offline business in Korea only for Chinese consumers, the financial watchdog said Thursday.

The Financial Services Commission (FSC) concluded that Alipay is not subject to the Korean Financial Transaction Law as long as it only provides services for Chinese customers.

Alipay requested the FSC review its plan to partner with Hana Bank and the Korea Information and Communication Corp. (KICC) as part of efforts to make inroads into offline stores.

Alipay expects that the payment system will help Chinese customers spend more from their bank accounts or on credit cards at Korean stores and shopping malls.

“We’ve decided that it doesn’t have to be subject to the local regulation unless it offers services for Korean consumers,” an FSC official said.

The regulator said that it notified Alipay and the Chinese operator has promised to operate the offline business only for Chinese visitors to Korea.

If it decides to extend its business to Koreans, it must get approval from the authorities.

The FSC will allow it to expand its affiliated stores without an approval procedure as early as next month if Alipay submits documents, which meet requirements.

The local affiliated stores are expected to attract more Chinese customers as only 10 percent of Chinese shoppers use credit cards.

Korean companies such as Hana Bank, KICC, Korean Air, Asiana Airlines, Air Busan, Lotte Duty Free and Lotte.com have partnered with Alipay.

Its business operation in Korea targeting Chinese shoppers has touched off controversy on whether it is legal or not to attract more partners including card companies, financial institutions and offline stores here.

The regulator said that if the law is strictly applied to the Chinese e-payment operator, consumption by Chinese tourists here is feared to shrink.

Alipay is available in more than 34 countries and operates its business without permission from the local authorities in other countries as well.

According to government data, 1.62 million Chinese visitors traveled to Korea during the April-June period, representing about 40 percent of the total foreign tourists of 3.76 million. Chinese tourists spent 7.67 trillion won in Korea last year, almost half of the total spending by foreign visitors.