Samsung and Alibaba's financial affiliate mobile payment services

As Samsung Electronics Co. looks to expand its presence in China, it plans to join hands with Alibaba Group Holding Ltd.’s financial-services affiliate to cooperate on mobile payments.

Both the companies released a press statement, stating Samsung’s mobile payment service, dubbed Samsung Pay, will work with Alibaba affiliate Ant Financial Services Group’s Alipay, which has more than 450 million active registered users. Ant Financial recently completed a financing round of $4.5 billion, valuing the privately-held company at about $60 billion.

This agreement definitely comes in as a move to strengthen Samsung's hold in the Chinese market which otherwise looks rather difficult. It is desperate to restore its fortunes in China and a tie-up with Alipay could give its service wider reach in a market

Samsung has tumbled to the sixth position in the smartphone market and is overtaken by domestic handset makers including Huawei Technologies Co., Xiaomi Corp., and others.

Similarly, Alibaba could benefit the tie up by expanding its services overseas, which definitely will be a priority for the company.

Taking a note of which, Alipay recently signed a deal with Uber Technologies Inc. to allow Chinese users to pay for rides with Alipay while traveling outside mainland China. Alipay launched in Europe last year and earlier this year as well.

According to data from the China Internet Network Information Center, more than 358 million Chinese use online payment systems on their smartphones. Alipay handles an estimated 58% of all online payments in China. According to Credit Suisse, underscoring the uphill battle that Samsung faces competition for mobile payments increases in the world’s biggest smartphone market.