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Alipay to give out USD 1.4 billion in coupons to boost consumption, increase app adoption

Written by Wency Chen Published on 

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Alipay hopes to increase adoption of the app among SME owners, while spurring consumer spending in China’s coronavirus-hit economy.

Online payment giant Alipay, owned by Alibaba’s financial affiliate Ant Financial, announced on Monday a nationwide RMB 10 billion (USD 1.4 billion) e-coupon giveaway to spur consumption and boost China’s coronavirus-stricken economy.

The release of the digital coupons will run from July 1 to July 17, and merchants from any sector can apply to join the 17-day event, dubbed “717 Live Extravaganza,” via the Alipay app. The coupons will be sponsored by Alipay, in tandem with customized discounts set by merchants, according to the company’s press release.

While detailed rules and discount amounts have yet to be disclosed, the move will allow Alipay users to snap up coupons on the app and redeem them when paying with Alipay at offline physical stores.

Since early March, different levels of governments across China—from provincial to municipal— have distributed several batches of e-coupons through mobile payment apps like Alipay, WeChat, and also e-commerce platforms such as ​JD.com​, Taobao, and Suning.com, in cities like Hangzhou, Shanghai, Beijing, and Qingdao. More than RMB 19 billion (USD 2.68 billion) worth of e-vouchers have been issued since.

“The app only released several coupons at a time, and I got five coupons one morning. Each gave me an RMB 10 (USD 1.4) discount with purchases over RMB 40 (USD 5.64),” said Zheng Zhanhua, a resident of Hangzhou, where the provincial government has issued RMB 1.68 billion (USD 237 million) in such coupons in via separate batches since March.

“I went to a grocery store just to redeem them,” she said.

Read more: Local governments to stimulate consumption in China via digital coupons

China digest

However, unlike previous batches of coupons issued by governments via the platform, Alipay will be the sponsor of this event. Alipay hopes to increase engagement and usage from owners of SMEs, as it has been reorienting itself from being a financial service into a “one-stop digital lifestyle platform”.

During the Alipay Partner Conference in March, the firm announced plans to open its platform by allowing third-party vendors to provide services like health-care and food-delivery on Alipay. The company also announced upgraded tools and features to help 40 million service providers digitize their businesses over the next three years.

The strategy is considered by some analysts as an attempt to take on giant on-demand service Meituan Dianping, CNBC wrote, as Alibaba also owns delivery service Ele.me and grocery-buying platform Fresh Hippo.

“The service sector in China is still in the nascent stages of digital transformation, and that means it has huge untapped potential,” said Simon Hu, CEO of Ant Financial, during the March’s conference, adding that the usage of Alipay’s mini-programs skyrocketed during the coronavirus pandemic.

On May 20, Hu announced that, merchants would soon be able to use Alipay’s consumer coupon product to reach the app’s 1.2 billion users to boost sales.

E-coupon initiatives have come have come at a time when the government wants to spur consumer spending in China. In the first quarter of 2020, the country reported gross domestic product (GDP) contracted by 6.8% from last year’s level—the first decline since 1992, when official quarterly GDP records started. Consumer spending contributed to 57.8% of China’s GDP growth in 2019, according to the National Development and Reform Commission.

According to Alipay, every one RMB 1 (USD 0.14) in Alipay coupons drives RMB 8 (USD 1.13) of sales on average.

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