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Billionaire Ma’s Alipay Offers Payment Services for Funds

Billionaire Ma’s Alipay Offers Payment Services for China Funds
Alibaba founder Jack Ma gives a thumbs up after speaking at an event to mark the 10th anniversary of China's most popular online shopping destination, Taobao Marketplace, in Hangzhou on May 10, 2013. Photographer: Peter Parks/AFP via Getty Images

Billionaire Jack Ma’s third-party electronic payments operator agreed to offer services to fund companies in China, extending his footprint in the nation’s heavily regulated finance industry. Co. has reached agreements with 37 companies, Florence Shih, a spokeswoman at Ma’s Alibaba Group Holding Ltd., said in an e-mail yesterday, confirming a filing with the China Securities Regulatory Commission. “The specific forms of cooperation vary; in most cases, Alipay provides payment services on the fund companies’ official websites,” Shih said.

The cooperation with the fund companies, including Bank of Communications Schroder Fund Management Co. and Aegon-Industrial Fund Management Co., will help Ma extend his reach in financial services, according to Wang Weidong of IResearch. Ma, chairman of Alibaba, which won regulatory approval in July to expand funding for its online loans business, has said China’s financial industry needed an outsider to “stir things up.”

“The cooperation has expanded Alipay’s service and made it a more convenient platform to buy fund products,” Wang, an analyst at the Shanghai-based Internet consultant, said by telephone. “This will help Alipay attract more users.”

Tenpay, the online payments system of Tencent Holdings Ltd., also agreed to offer services to 10 companies, according to the filing with the regulator.

‘Leftover Treasure’

Alipay began offering currency fund products by Tianhong Asset Management in June on a new platform called Yu’E Bao, meaning “leftover treasure” in Chinese. The service attracted 2.5 million users with 5.7 billion yuan ($931 million) of investments by the end of that month, Alipay said.

Online shoppers who use Alipay have the option of putting their spare cash into Yu’E Bao to earn variable returns. The service has no minimum requirement and users can withdraw their money anytime.

The annualized return based on the latest seven-day average was 4.48 percent on Aug. 4, according to Yu’E Bao’s website. That compares with a 0.35 percent interest for savings-account deposits, according to China’s central bank.

Beijing-based China Asset Management Co. this month began offering a service similar to Yu’E Bao on Tencent’s WeChat instant-messaging app. WeChat users can invest with a minimum of 100 yuan.

Alipay, which was spun off from Alibaba Group, China’s largest e-commerce company, had more than 800 million registered accounts as of July. Alipay is now wholly owned by a Chinese domestic company that’s about 46 percent held by Ma, according to company registries in May.

The Paypal-like service falls under Alibaba’s Small and Micro Financial Services Group, which is still under formation, the company said in an e-mail. Earlier this year, Alipay reorganized its operations into three units -- Shared Platform Business Group, Domestic Business Group and International Business Unit.

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