Alipay hopes to boost its transaction volume among affluent consumers in China by promoting its namesake online payment service as a payment option to online retailers in North America.
The draw for North American merchants is gaining access to Alipay's 56 million Chinese users. In turn, those merchants would offer Chinese consumers access to products they cannot purchase at home.
The Alipay system grew out of Alibaba.com, a business-to-business e-commerce site run by Alibaba Group of Hangzhou, China. Yahoo Inc. owns a minority stake in Alibaba, and the Chinese company run Yahoo's Web site in that country.
Alipay is "similar in concept" to PayPal, the payment system owned by eBay Inc., according to Philip Philliou, a partner with Philliou Selwanes Partners, a New York firm that is promoting Alipay in the United States under a deal announced Dec. 20. Alipay's large user base speaks to its popularity, he said.
"In a very short period of time, they were able to scale very quickly in a market that's still fairly nascent for the payments business," Mr. Philliou said.
The Alipay system handles an average of 1.17 million transactions a day, worth about $23 million, he said.
Though Mr. Philliou would not name any of the online merchants he is talking with, he predicted that some will be accepting Alipay transactions by yearend. Alipay would typically be listed alongside other payment methods on the checkout pages of merchants' Web sites, he said.
Alipay holds a lot of appeal to "Chinese urban professionals," he said, because "when they travel, they look to purchase products they can't buy in China, and a lot of these products are American products."
These include cultural works like books and music, but they also include health-care and food products, Mr. Philliou said.
Right now Alipay is used primarily in China and Japan, he said.
For merchants to reach Chinese consumers, they need a system like Alipay, Mr. Philliou said, even if they already accept other payment methods that work in foreign countries.
"Just because the American online retailer accepts it, the reality is the Chinese consumer doesn't have it," he said.
Jennifer Roth, a senior analyst with the global payments practice at TowerGroup Inc., a Needham, Mass., independent research firm owned by MasterCard Inc., said there is demand on the part of consumers in China for North American merchants to accept Alipay, but Alipay still has its work cut out for it.
"There are a couple of things that merchants will have to get past — new barriers," she said.
For example, "There are many Web sites that do not even allow Asian" Internet addresses "to come through, because there is a large amount of hackers that come in from Asia," she said.
The language barrier is another consideration, Ms. Roth said. "The Web site is going to have to be bilingual, so they're going to have to invest in" adding Chinese language pages as well as in customer service, she said.
That means merchants wishing to accept Alipay would need to do more preparation than if they were to accept local alternative payment methods, such as those offered by PayPal or Bill Me Later Inc., Ms. Roth said.
Alipay will likely have more success with Web sites that already sell to China and accept payments through more traditional methods, such as debit and credit cards, she said.
To reach those larger merchants, Alipay will first need to forge partnerships in North America, and its work with Philliou Selwanes Partners is a good first step, Ms. Roth said.
"They definitely have to choose their partnerships wisely," she said. "They're going to have to rely on PSP to help them with this."
Alipay boasts a 54% market share in China, which Ms. Roth said is enough to catch the attention of international e-commerce sites. And though debit and credit cards can be used for international purchases, many Chinese shoppers may have misgivings about putting such information online, she said.
"It's all about the security and trust that you feel with your payment providers, and with the Web site itself," she said.
