Tech Transformers

Samsung Pay partners with Alibaba's Alipay on payments

Samsung has struck a partnership with Alipay, China's biggest payments service that is run by Alibaba affiliate Ant Financial, as Samsung looks to expand its footprint in the world's second-largest economy.

Currently Alipay is a separate app on devices; when a customer goes to pay for something in-store, they need to open the Alipay app, then scan a QR code provided by the retailer.

Samsung users will be able to scan that code from an Alipay option in the Samsung Pay wallet.

Samsung Pay works by allowing consumers to tap their smartphones on a near-field communication (NFC) terminal but it also works with traditional magnetic stripe technology. However, users of Alipay via Samsung Pay will still have to scan the retailer's QR code.

Ant Financial

While not a radical departure from the existing way of paying with Alipay, users can access their code quickly by just swiping up on a locked phone screen, removing the need to access a new app.

"It reduces friction and time to make a purchase will increase adoption," Jack Kent, senior mobile analyst at IHS, told CNBC by phone.

For Samsung, it's a chance to increase the number of people using Samsung Pay. Alipay has 450 million users and processes 170 million transactions per day. It is China's biggest payments service, beating solutions provided by the likes of Tencent, and it is deeply ingrained in the Chinese consumer's mindset.

Samsung hopes these consumers will now access their Alipay accounts via Samsung Pay, helping to stoke adoption of the Samsung payment technology as it battles Apple. Samsung Pay launched in China in March, while its U.S. rival launched Apple Pay in February. Foreign companies have found it tough going in China, so the partnership with Alipay will help Samsung navigate the regulation as well as build relationship with consumers in China.

Payment services are seen as a big differentiator for device makers and something that could prove crucial for Samsung in China. The South Korean electronics giant saw its market share in the country fall to 7 percent in the first quarter of 2016 from 10 percent in the same period last year. Mobile payments could be a way to reverse that trend.

"Mobile payments are sticky and they provide access to generally wealthier segments of the mobile market, so having mobile payments on devices is not the only route to success but it is one major pathway," Neil Mawston, analyst at Strategy Analytics, told CNBC by phone.