New online payment platform to challenge Alibaba

0 CommentsPrint E-mail Global Times, April 28, 2010
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Alibaba may lose its dominance in the online payment platform in its home market, since China's Central Bank will launch a rival one to AliPay with other banks.

People close to the matter said the central bank and other several Chinese banks have begun their cooperation to jointly establish an online payment platform to help clear settlements among banks.

The new system will go on trial in August this year, but regulatory bodies are expected to define the roles of AliPay and other third party online payment services next year. In the worst-case scenario, the central bank could give the new platform monopoly status for certain inter-bank online clearing services.

Although the central bank aims at making online banking for China's financial institutions more efficient and competitive, the action has posed challenges to Alibaba, whose competitiveness may be impacted during overseas expansion.

Alibaba's advantage lies in its tailored settlement solution for some industries and clients, which cannot be emulated by banks in the long term, said Cao Fei, an expert in e-commerce with Analysys.

Convenient online payment has been one of the reasons for Alibaba's success abroad. As part of its efforts to expand its global presence, the company revealed that it will accept payment on PayPal, the third party online payment platform of Ebay at AliExpress, a newly-launched website for international trade.

Covering 75 percent of the market share in the first quarter this year, AliPay plays a dominant role in third party online payment services in China. The platform claims to have developed partnerships with 65 Chinese banks, with trade volumes hitting 1.2 billion yuan ($176 million) per day with over 300 million registered users.

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