China's Alibaba now accepting PayPal payments

IDG News Service - Alibaba Group, the biggest e-commerce company in China, is accepting payments made using PayPal on one of its e-commerce sites, even though the company runs its own competing payment platform called AliPay.

The site, called AliExpress, targets small to medium-sized retailers and wholesalers outside of China that want to source products from Chinese companies, said Linda Kozlowski, a spokeswoman for Alibaba in Hong Kong.

Unlike Alibaba.com, the company's main site where customers typically order large quantities of customized goods and make payments offline, AliExpress was set up to handle smaller orders of goods that suppliers already have in stock. Payments can be made using PayPal, Visa, MasterCard or bank transfer.

While AliPay isn't offered as a payment option on AliExpress, the payment platform is still used to provide an escrow service on the site, she said.

Alibaba is offering users the ability to pay with PayPal because the company believes users benefit from having a choice of payment options. "It's simply another option for payment," Kozlowski said.

The announcement that Alibaba is accepting PayPal as a payment method is notable given the competition between the two companies, as well as with PayPal's parent, eBay.

Alibaba's Taobao consumer e-commerce and auction site dominates the Chinese market, having built its success there largely at eBay's expense. In addition, Alibaba executives have said they're committed to expanding AliPay internationally, a move that will inevitably lead to greater competition with PayPal.

Earlier this month, Alibaba announced plans to invest 5 billion yuan (US$702 million) in AliPay over the next five years to fund its international expansion plans.

How the partnership between Alibaba and PayPal will play out remains to be seen. Kozlowski declined to comment on whether or not Alibaba plans to expand the availability of PayPal to its other e-commerce sites.