The Rise and Development of Internet Finance in China : A Study on the Operation Model of Alipay

Abstract

Purpose: Low entry barriers in an earlier period have caused a substantial number of Internet finance organizations and platforms of different qualities in China, among which some excellent enterprises have set benchmarks for the industry. This study reviews the rapid development of China's Internet finance and analyzes its related economic and social backgrounds. It then uses Alipay as an example to introduce China's leading Internet finance development mode. Ultimately, this study provides a profound analysis on the impact and potential risks in China’s Internet finance. Composition/Logic: This paper first introduces and discusses an overview of China’s Internet finance. Section 2 analyzes Alipay’s operations model; specifically, the model addresses Alipay’s development aspects, market share, payment modes, competitive advantage, and income structure. Section 3 primarily relates to the influence of Internet finance and its main causes. This section examines the reconstruction of China’s financial market and financial regulation system, which are accelerating improvement in these days. Section 4 provides the study’s implications. Findings: This study is significant as it analyzes the growth and background of China’s Internet finance with a focus on Alipay. The research proposes the possibility of reconstructing China’s financial market structure due to the development of Internet finance. The study also indicates a correlation between financial risk and Internet finance. Originality/Value: The study analyzes China’s Internet financial market and presents concrete suggestions. Specifically, we divide Alipay’s income structure into service benefits, interest of precipitation funds, advertising revenue, and indirect benefits. Further, we present that China must focus on improving efficiency, extending technological development, and focusing on risk control in Internet finance.