Alibaba Affiliate Stops Payment Services at China Retail Stores

Alipay.com Co., an affiliate of Alibaba Group Holding Ltd., halted payment services at traditional stores in China amid increasing competition between the nation’s financial sector and its biggest e-commerce company.

Alipay, controlled by billionaire Jack Ma, stopped the use of point-of-sale devices in stores today, Teresa Li, a spokeswoman for the company, said in an e-mailed statement. Li declined to elaborate.

The payment business, which started as a way for shoppers to buy goods online, has expanded for use in retail outlets, where it competes for transactions with state-backed China UnionPay, the nation’s largest electronic-payment network. State-owned financial institutions are stepping up their efforts to boost services in the world’s largest Internet market.

“Alipay and China UnionPay are in direct competition,” said Ricky Lai, an analyst at Guotai Junan International Holdings Ltd. in Hong Kong. “Alibaba’s expansion in financial services online has convinced a lot of people there is potential to make money, and the traditional banks would like to join in.”

There are more than 10,000 devices in stores for Alipay users, and the company is arranging for banks to serve merchants on its network, Li said in the e-mail statement. Alipay has partnerships with China Post, the nation’s postal service, and convenience stores.

Alibaba has been expanding into microlending and credit payments after Ma said an outsider was needed to “stir things up” in China’s financial services industry.

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