The Alibaba Group is generating quite the buzz recently. The company lifted brows around the world as it embarked on its road show journey. Its IPO, now priced at $68 per share and raising just under $21.8 billion, is making headlines as the largest IPO in the history of the US stock market. Alibaba’s unique business model is catching global attention by offering a huge variety of online services, from marketplaces to music streaming to payment systems.
Last week we discussed some of Alibaba’s major marketplaces. Now, let’s investigate its robust payment system accompanying the transactions.
What Is Alipay?
Alipay is Alibaba’s popular mobile payment platform in China — an alternative to a credit card. In response to increased foreign transactions, Alibaba created Alipay in 2004 to build consumer trust with foreign sellers on its e-commerce platform. The secured payment system requires no transaction fees and is highly trusted by the Chinese people.
The payment escrow service accounts for roughly half of all online payment transactions in China. Late last year, the company reported nearly 300 million users and 2.8 million transactions. Every day through November and December 2013, an average of 12 million payments were made via the Alipay mobile app.
Culture greatly influences shopping patterns. In China, consumers don’t like to spend money they don’t have. Even though credit card use is on the rise, using credit for foreign transactions isn’t ideal.
Alipay offers a trusted alternative to credit card payments. It’s an escrow service, meaning that the system will hold a buyer’s payment while the order is being processed. Payment is only released to the seller if the buyer confirms that the order was received in satisfactory condition.
AliPay Also Does What?!
Think PayPal on steroids. Providing effortless e-commerce payments is just a portion of Alipay’s service offerings. The payment platform is essentially an all-in-one banking tool. In addition to purchasing items online, users can also use Alipay to purchase items in brick-and-mortar stores, pay bills, send money to friends, invest in stocks and more. This can all be done either on a desktop browser or through Alipay’s Wallet app.
Forbes has accurately described Alipay as a financial Swiss Army knife for your phone.
Blog post by Jordan Nowlin, social media and blog manager, ChannelAdvisor
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