Alipay to charge for transfers to personal bank accounts from October

Alipay, the payment service provider owned by tech giant Alibaba Group, will begin charging Chinese users for money transfers made to personal bank accounts from next month.

Starting from October 12, Alipay’s individual users will need to pay a fee of 0.1 per cent on digital transfers to bank accounts where the accumulated sum exceeds 20,000 yuan (HK$23,200), the company said in a statement on Monday. The minimum fee per transfer will be set at 0.1 yuan, it said.

The new charge is being imposed to offset rising operating costs, Alipay said in the statement.

“While we are providing more and more convenient and secure services, Alipay’s operating cost has been increasing at a relatively fast pace,” it said.

Alipay, controlled by Alibaba’s financial affiliate Ant Financial, is the most popular payment service platform in China. Alibaba owns the South China Morning Post.

In terms of transaction value of mobile payment, the market share of Alipay in the first quarter reached 63.4 per cent, a study by Beijing-based internet consulting company Analysys International showed.

Tenpay, internet giant Tencent’s mobile payment technology that drives WeChat Wallet, had 23 per cent of the Chinese mobile payment market in the first quarter.

WeChat Wallet, Alipay’s biggest rival, began charging similar fees in February this year. Their charge is also set at 0.1 per cent and is levied on digital transfers to bank accounts when the accumulated transaction value exceeds 1,000 yuan.

Analysys’ study said the total transaction value via mobile payments in China amounted to 5.97 trillion yuan in the first quarter of 2016, an increase of 5.34 per cent from the previous quarter.

Ant Financial was recently reported to be considering dual listing, floating shares on both the Hong Kong and Shanghai stock exchanges. But the plan was said to be on hold because of regulatory hurdles.

As the owner of China’s largest online payment service company Alipay, Ant Financial’s valuation reached US$60 billion after its latest round of funding in April, which raised US$4.5 billion.

Mobile payment services have changed many people’s habits in China. However, users may consider making fewer transfers to bank accounts after Alipay’s new charge.

“Alipay is convenient as many of my friends and family members are using it, so I used to keep more money in my account for online payments or transferring to bank accounts,” said Zhang Jie, who works for a research company in Beijing.

He said he would consider using online banking services if Alipay’s new charge is imposed. “If the amount is small, money transfer via online banking is free of charge. So I don’t need to keep too much money in my Alipay account in the future,” he said.

While Alipay’s new transaction fee will be levied on individual users, withdrawals to bank accounts by merchants under Taobao and Tmall, Alibaba’s e-commerce sites, remain free of charge.

“It’s not a bad thing that small merchants are exempted from the new charge,” said Kelvin Lau, who runs a store selling face masks and wearable children’s car seats on Taobao.

“If the fees on withdrawing money from Alipay to banks expand to small merchants, we have no choice but to pay for it as Alipay is the main channel for us to receive money from consumers.”