Alibaba is at risk of losing the dominant position of its electronic payment platform in its home market, as China’s central bank pushes lenders to launch a joint rival platform to compete directly with AliPay. According to people close to the talks, the People’s Bank of China has started working with Chinese banks to set up a platform that would help clear online payments between banks. The first test phase of the system is scheduled to start this August but final decisions from the regulator on the role of AliPay and other third-party online payment services are not expected until next year. The development could weaken Alibaba, which runs the world’s largest online trading platform for businesses, at a time when it is trying to expand internationally. In the worst-case scenario, the central bank could give the new platform monopoly status for certain inter-bank online clearing services.
AliPay is the dominant third-party online payment platform in China with a 75 per cent market share in the first quarter, according to Analysis, a local research house. The payment platform boasts more than 300m registered users and a daily transaction volume of Rmb1.2bn ($176m) and co-operates with 65 Chinese banks. Source: FT