Alibaba goes into payments

With Alibaba agreeing a deal with the Industrial and Commercial Bank of China on escrow services, is their online payment system Alipay heading for the West?

One of the biggest problems with Chinese e-commerce for the West has been the scarcity of a trusted online payment system.  The Chinese do not have a great amount of time for credit cards, prefering cash.  This is obviously a problem for any ecommerce that does not involve some face to face contact.

Alipay should be an interesting experiment.  Although focussed on China at the moment, Alibaba made its money through linking up Chinese manufacturers to the West.  There’s no reason to think that they won’t go the other way.

Here is the March story on the Alipay venture and a discussion on webmaster world.

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4 Responses to Alibaba goes into payments

  1. I agree that focusing on Alibaba’s payment system is an interesting ‘game’ to watch and it could take on an international twist. Whether local manufacturers will want their foreign receipts turned into Renminbi by the banks is another matter. Most of them like to keep their forex offshore as long as possible (thus all the ‘trading companies’ based in Hong Kong). China’s foreign exchange system is still partially closed and this makes an international payments settlement system very complicated. Rolling it out fully over both the Chinese B2B site alibaba.com.cn and the auction site taobao.com will probably the next steps. I wonder if they’ll include it in the IPO?

  2. That’s a good point. Getting Yuan out of China may be a challenge.

  3. Alex says:

    Interesting.

    I’ve been dwelling on the subject recently. I think mobile phones are the main upcoming method of payment in China. It’s already possible to make payments through them. A lot of work has ben done through 2006 on network interchanges (hardware/firmware and behind-the-scenes). Mobile phones have a huge penetration level, far more than the Internet, and offer a reasonably secure method of payment, given they can perform secure connections and have stop-loss level (the amount of credit on the phone).

    Expect China’s online payment system, any kind of payment system, to be mobile phone dominated. Alibaba are barking up the wrong street, regarding Chinese domestic transactions.

  4. Interesting idea, Alex. Would China be a pioneer in this or have there been succesful uses of this method in other countries?

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