STEP 3

Pros and Cons for Jack Ma's Solution

"How did Alipay come about? At that time, I went to a bank, and the bank said, ‘we can’t do that [online] because it’s a financial product.’ But if a Chinese company didn’t get into payments, some international company would come to do it and we’d end up the victims. When I was at Davos, I went to hear Clinton speak on the power of leadership. I suddenly understood what that meant: boldly doing something you believe in, something that won’t hurt your country or your customers. So, I decided to do it, and threw everything into it. If Mr. Zhang went to buy something from Mr. Li but Mr. Li didn’t ship the product, Mr. Zhang could pay the money through Alipay and if he was duped out of RMB 1 million we’d reimburse him RMB 1 million. People thought I was bluffing, but I really had the money there ready for reimbursement. We got the system set up nice and clean, and I wasn’t taking a penny, so it could be inspected whenever. That way, the government would think: well, if you don’t do this, who will?" (Jack Ma,2015)

Even though no bank wanted to collaborate with him, Jack Ma solved his company's dilemma by establishing his own payment platform known as Alipay, which allows worldwide buyers and sellers to easily transfer different currency payments. There are various advantages and disadvantages to Jack Ma's solution. The pros and cons are shown in the table below.

Pros 

Cons 

  • Increased security
  • Convenience
  • Innovation
  • Growth
  • Better control over payment process
  • Easy to connect with his company 
  • Independence from bank 
  • Rapid and easy payment 
  • Better fraud protection 
  • Better customer support 


  • Limited geographical reach 
  • Risk
  • Time consuming
  • Dependence on Chinese government policies
  • Not reliable
  • Limited acceptance 
  • High development costs 
  • Complex regulations 

 

T-Chart


Solutions for Limited Acceptance (disadvantage)

Limited acceptance of Alipay as a payment program for international transactions is one of the cons of Jack Ma's solution of establishing Alipay. This means that Alipay may not have been as widely accepted by international customers and merchants as other established payment providers, which could have limited its reach and scalability. 

One solution would be to partner with other e-commerce platforms that have a large customer base in other countries. This would have allowed Alipay to be integrated into the checkout process of these platforms and make it easier for their customers to use Alipay as a payment option. This would have increased the reach and acceptance of Alipay among international customers.

Another solution could have been to focus on expanding its geographical reach. By partnering with local companies and payment processors in other countries, Alibaba could have been able to expand the reach and acceptance of Alipay. This would have allowed Alibaba to tap into new markets and gain access to new customers.

Finally, Jack Ma could have focused on increasing awareness and education about Alipay among international customers. This would have helped to establish trust and credibility in Alipay as a payment option and increase its acceptance among international customers.


Alternative solutions for the particular challenge faced by Jack Ma

  1. (MIN ER'S SOLUTION) - Third-party payment processors:One alternative solution would have been using a third-party payment processor such as PayPal or Stripe. These companies provide online payment solutions for businesses and individuals, allowing for easy international transactions and currency conversions. This would have allowed Alibaba to benefit from the established trust and security of these companies, which would have helped to establish credibility and trust with its users. However, one major disadvantage of this solution is that it would have been expensive for Alibaba to use these services, as they would have had to pay transaction fees to the payment processors.
  2. (XIAO YING'S SOLUTION) - Partnering with existing payment processors: This would have allowed Alibaba to benefit from the established trust and security of these companies, which would have helped to establish credibility and trust with its users. However, this solution would have required Alibaba to share a portion of its revenue with these partners, which could have impacted the company's profitability.
  3. (AISYAH'S SOLUTION) - Digital wallets: Such as Wechat Pay, Apple wallet, TnG wallet and etc, allow users from worldwide to store their money electronically and make payments without the need for cash or credit cards. These wallets are widely used in China and have become increasingly popular worldwide, as they provide a fast, secure, and convenient way to make payments online. If you're doing business with a Chinese supplier, using a digital wallet like could be a good option.
  4. (AINA'S SOLUTION) - Negotiating with banks: By educating banks about the benefits of online payments and the potential of e-commerce companies like Alibaba, it could have helped to ease their concerns and convince them to work with Alibaba to provide payment solutions for the platform. However, this solution would have required a lot of time, effort, and resources to negotiate with banks, and it may not have been a guarantee that they would have agreed to work with Alibaba.
  5. (NASRIN'S SOLUTION) - Implementing new features and functionalities: continuously improve the service by implementing new features and functionalities to make it more user-friendly and appealing to a wider range of customers.By doing this,Alipay can stay ahead of the competition,ahead of other mobile payment platform and attracted new customer. This can help to reduce the number of user facing limited acceptance issue. For example,Alipay could introduce new payment options such as QR code scanning to make payments more convenient for users thus  this can help to increase customer satisfaction and slowly solve the limited acceptance issue. Additionally Alipay could offer live chat or phone support so user can get immediate assistance for their questions and issue. Overall by adding more useful fetures,Alipay can stay ahead of its competitors and can be accepted by many
  6. (AYUNI'S SOLUTION) - Using cash on delivery: This solution would have allowed buyers to pay for their purchases in cash after they received the goods. This solution would have been very useful for people who were skeptical about making online purchases and were worried about fraud and scams. However, this solution would have required Alibaba to incur additional costs such as logistics, and would have limited the number of possible buyers.


SWOT analysis for the best alternative solution: third-party payment processors

Strengths:

The use of third-party payment processors would have provided online payment solutions for businesses and individuals, allowing for easy international transactions and currency conversions. This would have made it easier for Alibaba's customers to make payments, which would have helped to boost the growth of Alibaba's platform.

Third-party payment processors have established trust and security, which would have helped to establish credibility and trust with Alibaba's users. This would have made customers more comfortable making online purchases, which would have helped to increase sales on Alibaba's platform.

Weaknesses: 

One of the main weaknesses of using third-party payment processors is that it would have required Alibaba to pay transaction fees to the third-party payment processor. This would have reduced Alibaba's profit margins, which could have made it difficult for the company to be profitable.

Additionally, using third-party payment processors could have limited Alibaba's control over the payment process. This would have meant that Alibaba would have had less control over the customer experience and the ability to tailor the payment process to its needs.


Opportunities:
The use of third-party payment processors would have provided Alibaba with the opportunity to offer its customers a wider range of payment options. This would have made it easier for customers to make payments and could have helped to increase sales on Alibaba's platform.

Additionally, using third-party payment processors would have provided Alibaba with the opportunity to tap into established networks of customers and merchants. This would have allowed Alibaba to reach a wider audience and could have helped to increase sales on its platform.


Threats: 
One of the main threats of using third-party payment processors is that it would have increased the risk of fraud and scams. Third-party payment processors typically have less control over the payment process, which could have made it easier for fraudsters to take advantage of customers.

Additionally, using third-party payment processors would have increased the risk of data breaches. This would have put customers' personal and financial information at risk, which could have damaged Alibaba's reputation and made it difficult for the company to attract new customers.

Discussion Via WhatsApp (Xiao Ying)




























References

Ma, J. (2015). Jack Ma’s Internal Speeches: Trust in Tomorrow. Red Flag Publishing.

Davis, M. (2022, April 19). Alternate Methods of Online Payment. 

Tejeda, V. (2022, July 14). Third-Party Payment Processors. 

Shaw.S. (2022, Dec 26). How to Pay on Alibaba: Payment Methods, Fees and More. 
        Leeline Sourcing. https://leelinesourcing.com/how-to-pay-on-alibaba-payment/        

Tomar, D. (2020). Porter's competitive forces model and SWOT analysis to payments. International Journal of Computer Trends & Technology, 68(10), 56–59. https://doi.org/10.14445/22312803/ijctt-v68i10p110  

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