PayPal Competes With Alipay In China

Online, March 26, 2012 (Newswire.com) - According to GlobeBill (http://www.globebill.com) The Chinese online payment tycoon Alipay said it would spend $79 million to upgrade its cash-on-delivery (COD) payment infrastructure two days after PayPal said it was spend $79 million to upgrade its cash-on-delivery (COD) payment infrastructure.

Even though recently PayPal enables Chinese companies engaged in cross border trade, PayPal cannot operate domestically in China. According to a PayPal executive, PayPal was "cautiously optimistic" that it would receive a license to process payments in China and hoped to be the first foreign operator with such a license.

On the other hand, Alipay, which is Alibaba's unit, said on Monday that it would invest $79 million to upgrade the cash-on-delivery (COD) payment infrastructure of China's ecommerce industry in the next three years.

There is some statistics showing that more than 70 percent of the transaction volume on China's business-to-consumer (B2C) sites excluding Tmall.com is paid at the time of delivery. A majority of the COD transactions were paid with cash, according to Alipay. Alipay's COD payment strategy includes a portable device that consolidates logistics track record with credit/debit card payment information in one terminal rather than in two separate systems.

"A solution that integrates both payment and logistic systems helps B2C e-commerce companies to manage their information flow and cash flow simultaneously," said Dong Xiaoling, General Manager of Alipay's B2C Business Unit. Alipay's COD solution will allow merchants to receive payments within 24 hours of delivery, faster than the current industry practice which can take several days.

The year of 2012 may be a milestone year to Alipay, it plans to install 10,000 COD devices in the first half of 2012, covering logistics service in all first-tier cities. And by the end of 2012, a total of $16 million will be invested to implement Alipay's COD devices in all first and second-tier cities. Another leading B2C ecommerce company in China Dangdang.com has already started to implement the Alipay COD solution.