Alibaba's (BABA) AliPay has become the dominant mobile payment service in China and is now expanding its footprint into the U.S. to take on the PayPals (PYPL) , Apples (AAPL) , Alphabet's (GOOGL) and Samsungs (SSNLF) of the world that have already launched in the U.S.
The company on Monday signed a deal with credit card processing service First Data (FDC) to allow Chinese tourists to use the service while traveling abroad.
"Our goal is to extend reliable payment services to the over four million Chinese consumers who visit North America every year," said the president of Alipay North America, Souheil Badran, in a statement from First Data. "Extending our partnership with a premier partner like First Data provides the merchants with a seamless integration and access to consumers who want to continue paying with their lifestyle mobile app."
Shares of Alibaba were trading up slightly to $118.33 in early morning trading on Tuesday. The stock has been on a run, trading up nearly 50% in the past year and up about 35% YTD. Tencent shares were also advancing in Tuesday morning trading to $32.31. Tencent's stock is up over 63% in the past year and about 33% YTD.
Alibaba's push into the U.S. mobile payment sector comes after its rival Tencent Holding (TCEHY) announced in February that its WeChat Pay service was partnering with Silicon Valley-based integrated mobile payment platform CitCon to allow Chinese tourists to use its services in the U.S.
Tencent has been snatching away market share from Alibaba in the past year. AliPay's market share fell to 54% in the 2016 fourth quarter from 71% in the 2015 third quarter. Meanwhile, Tencent's WeChat Pay market share rose to 37% in the 2016 fourth quarter vs. 16% in the 2015 third quarter.
Launched by Alibaba in 2004, AliPay currently boasts 450 million global monthly active users (MAUs) while WeChat Pay claims it has 650 million global MAUs. However, AliPay is still the leader in China's $5.5 trillion mobile payments market, which is the largest mobile payment market in the world and more than 50 times the size of the U.S. market, the Financial Times reported. Alibaba and Tencent are also the only two Chinese companies to have a presence in Silicon Valley, where both companies are looking to expand their cloud services.
While AliPay will be competing directly with Apple Pay, PayPal, Samsung Pay and Android Pay, it's expansion in the U.S. could actually benefit these other players by encouraging other merchants and retailers to allow customers to use mobile payment services, Bloomberg Gadfly reporter Tim Culpan noted.
As of now, AliPay users in the U.S. will be able to use the payment app at 4 million merchants and retailers, but that number could increase as customers and retailers become more comfortable with mobile payments. Meanwhile, about 4.5 million U.S. merchants and retailers currently accept U.S. market leader Apple Pay, which launched in 2014. While Apple doesn't release revenue or number of users about Apply Pay, the tech giant said last week that transactions on the app rose 450% year-over-year in the latest quarter.
Alibaba's financial affiliate Ant Financial has also been active, agreeing to acquire the world's leading money transfer service by payments processed, MoneyGram International (MGI) , on April 16 for about $1.2 billion. On April 19 Ant announced it acquired helloPay Group, a Singapore-based payment service, Reuters reported.