Alipay tool set to target overseas retailers

Alipay, the online payment affiliate of Alibaba Group Holdings Ltd, is launching a new tool that will help US and European retailers sell products directly to Chinese consumers.

The service named ePass, which can be integrated into Western retailers' websites as an alternative payment solution like eBay Inc's PayPal, is expected to help overseas merchants tap into China's rapidly growing online shopping community without actually expanding their presence in the Chinese market.

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Through ePass, US and European merchants would be able to give Chinese consumers who are comfortable with shopping online in English a way to purchase goods directly from retailers' existing, stand-alone e-commerce websites in their home markets, said Li Jingming, president and chief architect of Alipay US.

"We are trying to make it easy for Western merchants to reach Chinese consumers without going into China," Li said, noting that with ePass, retailers do not need to set up warehouses or hire staff in China.

The service functions likes a combination of cross-border foreign currency settlement with overseas delivery solutions from Alibaba's China Smart Logistics Network, also known as Cainiao.

Shoppers are able to pay in renminbi through Alipay, the largest third-party payment solution provider in China, which processed almost half of the nation's $887.7 billion in online payments last year, and check the shipping information of their orders through Alipay Wallet, the app of Alipay with 190 million active users.

Analysts said that the ePass service is n line with Alibaba's globalization strategy and is expected to be popular with both retailers and consumers.

"Some investors were expecting Alibaba's two main online shopping platforms Taobao and Tmall to be launched in the West to rival eBay and Amazon.

"But it seems that Alibaba's globalization strategy is to connect the world to China's online retail market," said Neil Flynn, head equity analyst at Shanghai-based Chineseinvestors.com, a leading financial analysis firm of US-listed Chinese companies.

In the West, most shops now accommodate UnionPay cards as most Chinese customers use it as their only source making payments. But it is also frustrating for retailers, as payment transactions often involve a lengthy process, unlike other Western systems, said Flynn.

"This creates an opportunity for Alibaba, because if they can create a payment system that can process transactions much quicker than UnionPay, then it will become popular with customers and retailers," he said.

China's online shopping industry has grown exponentially and continues to do so. With the growing demand for overseas products and Western brands, Li from Alipay US said cross-border e-commerce "is already a $40 billion business".

Wang Xiaoxing, an analyst with the Beijing-based Internet consultancy Analysys International, said China's e-commerce market is dominated by strong local players like Alibaba and JD.com Inc, and US online retailers have found it difficult to access the Chinese market.

Wang said the ePass service may be difficult to work its magic. "The regulation of the online payment industry in the West is muc stricter than in China. Alipay also needs to cooperate with several banks and financial organizations in the West. Trust cannot be built overnight," he said.