Chinese ecommerce giant, Alibaba, is struggling with two of its biggest online payment systems, eBay subsidiary, PayPal, and Alibaba's own homegrown payment service, Alipay. With the future of these two payment systems in doubt, questions have arisen about how retailers will pay for wholesale products purchased through the huge overseas trading company.
According to Forbes.com, eBay and PayPal had been working closely with AliExpress, an Alibaba subsidiary that focuses on wholesale. However, Alibaba has been moving more toward a business model that focuses on consumers, in addition to business-to-business trade. Responding to Alibaba's increasing encroachment on its ecommerce turf, eBay has ended its year-old partnership with Alibaba. Forbes cites Reuters in suggesting that eBay, "was unhappy with rising consumer business on AliExpress, which is meant for businesses." Soon thereafter, PayPal announced that it was pulling out of a partnership in Alibaba's business-to-business platform, activating a 60-day termination notice.
Alibaba also wanted to expand its own online payment system, Alipay, to handle foreign payment transactions. However, the Chinese government will not let Alibaba offer those services because not enough of Alibaba is Chinese owned. Yahoo has a 40-odd percent stake in Alibaba, with a smaller chunk owned by a Japanese bank. So Alibaba handed control over Alipay to another company held by Alibaba CEO Jack Ma. The spin-off of the payment service was completed without talking with Yahoo, creating a dispute. With its online payment troubles, Alibaba's expansion plans beyond China are proving problematic, since a crucial part of ecommerce is accepting and facilitating online payments.
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