PayPal Inc. is in talks to add its payment system as an option at AliExpress, the shopping Web site operated by Alibaba.com Ltd. of Hong Kong, according to people familiar with the situation.
An agreement between the two companies would help expand PayPal in China and smooth Alibaba's entry into international markets such as the United States.
"The money will flow from the U.S. to China through PayPal," said an industry insider familiar with the situation, though it was unclear how close the two sides were to completing an agreement. An Alibaba spokeswoman said the companies have exchanged ideas over the last year but have not reached an agreement about AliExpress. PayPal, a unit of eBay Inc. declined to comment.
AliExpress currently offers users two payment options: credit cards and Alipay.com, the parent company's online payment system. Alipay is the top online payment brand in China but is largely unknown in many international markets, including the U.S.
The industry source said Alipay's low international brand awareness is a impeding Alibaba.com's efforts to move into new markets.
"Merchants in the U.S. aren't comfortable with Alipay. They want PayPal," the source said.
