PayPal versus Alipay in China
By Ina Steiner
Two days after PayPal said it was confident the Chinese government would grant it a license to compete domestically, Chinese firm Alipay said it would spend $79 million to upgrade its cash-on-delivery (COD) payment infrastructure.
PayPal currently enables Chinese companies engaged in cross border trade, but cannot operate domestically in China. Bloomberg Businessweek reported quoted a PayPal executive who said the company was "cautiously optimistic" it would receive a license to process payments in China and hoped to be the first foreign operator with such a license.
Alibaba's Alipay unit said on Monday it would invest $79 million to upgrade the cash-on-delivery (COD) payment infrastructure of China's ecommerce industry in the next three years. "Statistics show 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," and Alipay said a majority of the COD transactions were paid with cash.
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.
Alipay plans to install 10,000 COD devices in the first half of 2012, covering logistics service in all first-tier cities. A total of $16 million will be invested to implement Alipay's COD devices in all first and second-tier cities by the end of 2012. Dangdang.com, a leading B2C ecommerce company in China, has already started to implement the Alipay COD solution.
About the author:
Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to email@example.com.
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