Alibaba’s Financial Arm Partners With Wal-Mart to Grow Alipay Adoption

Updated from 9:57 a.m. to include comments from Wal-Mart.

NEW YORK (The Street) -- Alibaba's (BABA) financial affiliate Ant Financial today announced that it will be partnering with Wal-Mart (WMT) to roll out its mobile payment service Alipay in certain stores.

The partnership will begin with 25 stores in Shenzen and will then be expanded to all Wal-Mart stores in China.

"This is a significant move to Ant Financial, as we are expanding the number of offline scenarios for Alipay Wallet users to adopt Alipay as a payment option," Ant Financial spokesperson Miranda Shek said.

For Wal-Mart, it's about giving as many options as possible to its customers. "Alipay will help us serve our customers better by allowing mobile payment in seconds," Marilee Mcinnis, director of international corporate affairs at Wal-Mart, said. "Increasingly, our customers want convenience and the ability to shop however, whenever and wherever they want."

Alipay is a popular mobile payment service in China that allows consumers to pay with a smartphone. Cashiers simply scan a bar code on the screen to make the transaction.

As of October, Alipay had more than 800 million registered users and 190 million active users for its mobile app. It also claimed that it handles 45 million transactions a day.

Partnerships with retailers like Wal-Mart will only help further its adoption. The more retailers accept Alipay, the more consumers will be interested in using it. Alipay is currently accepted at more than 40,000 stores, including Carrefour stores as well as more than 1,000 supermarkets and stores owned by China Resources Vanguard Co.

Alipay's biggest rival, Tencent's WeChat Wallet, is also accepted at Carrefour stores.

As mobile payments begin to heat up in the U.S. too, it's important to notice the huge differences between the markets.

Credit cards are still not very widespread in China, according to Marshall Meyer, professor at the University of Pennsylvania's Wharton School, and the largest currency note is the 100 yuan note, about the equivalent of $16. This means that people are carrying around huge stacks of notes.

"Any alternative to cash that works is going to have a big market," he said. And so Alibaba and Tencent battle it out to provide a better solution for consumers.

On Tuesday, there were reports that Alibaba was in talks with Apple (AAPL) to bring Apple Pay to China, which would theoretically enter a new competitor into the system. However, it's possible that Alibaba will leverage Apple Pay and Alipay in tandem to create a more widely-integrated and universal platform.

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