NEW YORK (TheStreet) -- As mobile payments pick up speed in China, Alibaba (BABA) is aiming for gold with its financial arm Ant Financial's digital wallet Alipay.
With more than 350 million registered users and 270 million monthly active users, Alipay Wallet trounces its U.S. counterparts. Paypal, a unit of ebay (EBAY), by comparison, has 165 million active digital wallets. Alipay Wallet, which can be used for e-commerce purchases and in physical stores, has grown on the backs of more than 289 million monthly active users, who increasingly use it as opposed to entering in a credit card number.
"Alipay was established in 2004, initially to support escrow payment for Alibaba's online marketplace transactions," said Fan Zhiming, VP of Ant Financial Services Group. "Mobile payment is becoming more important, especially the younger generation, and they make up a great part of Alipay users. So it is important that we develop our mobile payment capabilities via Alipay Wallet."
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 cash, so a better payment system would be a huge relief for consumers.
From Alibaba and Ant Financial's side, more people using Alipay means more people in the Alibaba ecosystem who can more easily shop on Tmall and Taobao (Alibaba marketplaces).