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Alipay to tempt West's credit cards into China

Take that, PayPal: cross-border payments

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Alipay, China's answer to PayPal, already has 600 million account holders, but is looking to head west and enable cross-border payments for anyone with a credit card.

Chinese media is reporting that technical barriers have been overcome, and that international access to Chinese markets by ordinary credit card holders is only a month or two away. This'll be one in the eye for PayPal, which still has to operate separate businesses in China for internal and external transactions.

The Chinese don't like their currency being traded around the world, so getting money into and out of China is fraught with complications. That's why companies like PayPal have to run separate operations: PayPal.com for those wanting to make payments originating and terminating outside the country, and PayPal.cn for internal transactions, but Alipay reckons it can strike deals with the credit card companies to facilitate cross-border transactions.

Alipay used to be owned by Yahoo!'s best mate locally, Alibaba. Alipay was spun off last August, and is still affiliated with the group of companies that includes tat bazaar Taobao, which is comparable to PayPal's owner eBay, and Alibaba.com, which links companies together (generally Chinese manufacturers and western retailers) for mutual gain.

If Alipay can fix up international payments then it will mean anyone with a credit card (and an Alipay account) will be able to buy direct from China, assuming shipping can be arranged. Buying from a Chinese shop could become as easy as buying from the USA and perhaps a lot cheaper; that will encourage a lot of westerners to sign up to Alipay and put the site in a decent position to take on PayPal for the rest of the world market.

Local blog Penn Olson reckons there are already a million people who can already buy direct from mainland China using Alipay, as they're based in Hong Kong, Taiwan and Macau (areas Penn Olson describes as "Greater China", though the government of Taiwan might choose to disagree). That million is nothing compared to the potential for Alipay if it can put the deals in place, while PayPal will be forced to play catch up. ®

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