Alibaba Considers Payment Options for Taobao Users Abroad

Alibaba Group Holding Ltd., China’s biggest e-commerce company, is considering new ways to facilitate payments by overseas customers on its Taobao shopping site as cross-border transactions increase.

Alibaba’s Alipay affiliate is “working on a couple of ways” to allow Taobao users outside China to pay for goods and services, Brian Li, a vice president at Alibaba, said yesterday in an interview at the company’s headquarters in Hangzhou, China. Overseas users account for about 5 percent of the more than 400 million registered accounts at Taobao, he said.

China’s biggest online retail operator displays products in Mandarin only, and overseas users mostly make purchases through agents, Li said. Hong Kong, Russia and Japan are among the biggest sources of overseas users for Taobao, he said.

“It’s not convenient for foreigners to buy on Taobao using online payment services,” Li said.

Taobao already accepts payments from buyers using credit cards issued in more than 10 countries including the U.K., Japan, France and Australia, according to its website.

Alibaba doesn’t plan to promote the Taobao site overseas at present, Li said. The company had considered setting up an English website for Taobao before deciding it wasn’t needed, he said. The emergence of third-party intermediaries between overseas buyers and Chinese sellers made this unnecessary, Li said.

Shipping Challenge

Shipping presents a “bigger challenge” because many vendors lack the ability to send products overseas, Li said.

Taobao and Tmall.com, a sister site that opened in 2008, dominate e-commerce in China and together account for 71 percent of consumers’ online purchases, according to research company Analysys International. Most of those customers use Alipay.

Alibaba.com Ltd. (1688), an Alibaba Group unit that operates a e- commerce site for business owners, already offer services internationally. The subsidiary is being delisted from the Hong Kong stock exchange after the parent completes a $2.5 billion buyout of minority shareholders.

Alibaba’s ownership of the Alipay online payment business was transferred to a company controlled by billionaire founder Jack Ma, shareholder Yahoo! Inc. (YHOO) said last year. The spinoff prompted Yahoo to negotiate compensation with the Chinese company.

The transfer of Alipay into Chinese ownership was necessary to facilitate applying for an online payment license in China, Alibaba had said. The Chinese company agreed on a compensation deal with Yahoo and Softbank Corp. (9984), another shareholder, in July 2011.

To contact Bloomberg News staff for this story: Liza Lin in Shanghai at llin15@bloomberg.net; Mark Lee in Hong Kong at wlee37@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net

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