Apple and Alibaba talk marriage of mobile payments

Alibaba founder Jack Ma and Apple chief executive Tim Cook. Photos / AP

Apple's Tim Cook and Alibaba's Jack Ma speaking separately at a technology conference Monday, said they're open to working together on projects that would turn phones into tools for buying and selling stuff.

Cook and Ma, appearing at the WSJDLive tech conference in Laguna Beach, California, spoke of collaboration on mobile payments.

"I'm very interested in that," Ma, founder of Alibaba Group Holding Ltd., said when asked if it made sense for his company's Alipay Wallet mobile system to team with Apple Pay. "As always, a good marriage needs both sides hard working. I respect Apple and respect Tim very, very much."

Cook, who was sitting in the audience, took to the stage afterward and was asked about the possibility of a partnership.

"We're going to talk about getting married later this week," said Cook, chief executive officer of Apple. "I love what he's done, I think he's a brilliant guy. I think he has brilliant people at the company so if we can find some areas of common space, I love it. I love partnering with people like that."

The talk of partnership follows Cook's visit to China last week where he discussed plans to more than double the number of stores it operates in the Greater China region in the next two years to 40 as the company expands its business.

Alibaba shares climbed as much as 2.8 percent to $100.50, topping the $100 threshold for the first time since its Sept. 18 initial public offering.

"A lot of the move is related to his comment yesterday," Neil Doshi, an analyst at CRT Capital Group, said of Ma's remarks. "They want to get more entrenched in the US market, partnering with Apple will be a positive step to reach that goal."

Apple's effort to replace the physical wallets of consumers with its mobile-payment system ran into a roadblock as CVS Health Corp. and Rite Aid Corp. disabled the technology in their drugstores last week.

CVS and Rite Aid are among 220,000 U.S. merchants that already have technology in place to read the short-range wireless signals that enable customers of Apple Pay or similar services to make a purchase by waving their smartphones. The retailers weren't among those named as accepting Apple Pay when the iPhone maker revealed its system last month.

Cook called it "a skirmish."

"We're just getting started but the early ramp looks fantastic," he said.

More than 1 million cards were activated within the Apple Pay system during the first 72 hours, Cook said. Credit card companies told Apple that it's already the leader in contact- less mobile payment at the point of sale.

"And not just No. 1, but we're more than the total of all of the other guys," Cook said.

The drug retailers not accepting Apple Pay are part of a consortium developing a competing system. At stake is a market that's projected to jump to $90 billion in 2017 from $12.8 billion in 2012, according to Forrester Research Inc. Apple's entry into mobile payments follows efforts by Square, Google and Softcard - a wallet application backed by the three largest U.S. wireless carriers - that all failed to gain widespread appeal.

The mobile version of Alibaba's payment system Alipay Wallet handles 45 million transactions a day and has 190 million active users, Liu Lejun, general manager of the mobile business unit said this month.

Alipay Wallet products allow users to pay for hospital fees and rent cars in Beijing and Hangzhou, according to a display at a conference in Beijing. There are also payment options for retail stores that use Alipay bar codes.

"We love to partner with people that are wicked smart, that have flexible teams, that are product based and that push us and we like to push them," Cook said. "I think Jack has a company just like that."

-Bloomberg