Alibaba to delve deeper into online payments

0 CommentsPrint E-mail Xinhua, April 12, 2010
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An Alibaba booth at a recent digital products exhibition held recently in Beijing. The company's subsidiary Alipay controlled about 50 percent of China's online payment market in 2009. [China Daily]

An Alibaba booth at a recent digital products exhibition held recently in Beijing. The company's subsidiary Alipay controlled about 50 percent of China's online payment market in 2009. [China Daily]

Chinese e-commerce giant Alibaba Group said on Monday it will invest 5 billion yuan ($732 million) over the next five years in its online payments subsidiaryAlipay.com Co Ltd as part of its effort to maintain its lead over rivals Tencent Holdings and EBay Inc.

The new funds, according to Alibaba, will be used to improve the security of its payment infrastructure, the development of payment products and to attract new customers.

The company said it would also commit additional resources to online safety and security, risk and data management, as well as innovation in new technologies such as mobile payments.

"Online payments will continue to play an ever-growing and significant role in the development of e-commerce as well as the stimulation of consumer demand," said Lucy Peng, chief executive officer of Apilay and the chief personnel officer of Alibaba Group.

She said Chinese consumers expect a safe, convenient and affordable payment platform.

Alibaba's announcement came shortly after US-online payment firm PayPal Inc last month clinched an agreement with Chinese national electronic-payment network China UnionPay that enables Chinese users to make purchases on overseas websites.

PayPal is owned by EBay Inc.

Alibaba's online auction site Taobao.com said it plans to double its workforce in the Asia-Pacific region to 2,000 by the end of 2010 as it expands its China market share.

Boosted by the country's increasing online population, Internet transactions through online payment firms in China more than doubled to 576.6 billion yuan last year and are expected to hit 2.75 trillion yuan in 2013, according to Beijing-based research firm iResearch.

Alipay controlled about 50 percent of the market in 2009, compared with about 21 percent by rival Tenpay, offered by Internet company Tencent Holdings, the research firm said.

"The new investment makes it clear that Alibaba still regards Alipay as an infant business that needs long-term investment, rather than a mature revenue generator," said Cao Fei, an analyst from domestic research firm Analysys International.

Earlier reports have said that Alipay broke even last year and may consider a public offering in the near future.

Since its establishment in 2004, Alipay quickly became China's most popular online payment tool.

That's due to its unique business model that vouches for online sellers and buyers, thus significantly increasing online trades and transactions, analysts said.

That partly helps Alibaba beat its rival EBay, which shut down its China site in 2006 after its market share declined by half due to the rise of Taobao.com, an online-auction site owned by Alibaba, analysts said.

EBay then entered into a joint venture with Tom Online Inc.

Alipay said on Monday that it has over 300 million users at the end of last month.

 

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