PayPal In Negotiations With Alibaba In China

EBay's online payment subsidiary PayPal is negotiating with the Chinese B2B e-commerce group Alibaba, aiming to introduce its online payment service in China into Alibaba's worldwide site of AliExpress.

According to reports in local Chinese media, if the two parties can reach an agreement, U.S. consumers will be able to remit their money to China via PayPal, which will not only help PayPal expand its business in China, but also will aid Alibaba's entry into overseas markets.

AliExpress is a new wholesale marketplace launched by Alibaba.com in 2009, offering wholesale prices on even the smallest orders. With minimum orders as low as 1 item, secure escrow payment, and express delivery with full tracking, AliExpress claims to be the one-stop shop for online sourcing.

However, the default payment option for AliExpress is Alipay.com, the online payment subsidiary of Alibaba Group. Though it is a popular payment platform in China, Alipay.com's popularity in overseas markets is limited, which is a barrier for Alibaba's development of new international markets.

PayPal reportedly currently has 375,000 active accounts in the Chinese mainland, Hong Kong, and Taiwan. Its trade value reached nearly USD1.3 billion in 2009, an increase of 12% compared with the previous year. With cooperation with PayPal, AliExpress aims to build a bridge between Chinese vendors and foreign buyers.

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