Alipay, China's biggest provider of online-payment services, plans to invest 500 million yuan (HK$611 million) over the next three years to upgrade its cash-on-delivery infrastructure across the mainland.
The capital outlay will primarily involve the deployment of portable cash-on-delivery (COD) terminals, which look similar to point-of-sale machines used in department stores, to provide online merchants with logistics data and enable them to process payments made with credit and debit cards by consumers.
Hangzhou-based Alipay, which had more than 650 million registered users as of December, is an affiliate of mainland e-commerce giant Alibaba Group, the parent of Hong Kong-listed Alibaba.com and the three privately held Taobao online-shopping platforms.
'A solution that integrates both payment and logistics systems helps business-to-consumer e-commerce companies to manage their information and cash flow simultaneously,' said Dong Xiaoling, the general manager of Alipay's business-to-consumer unit. 'Alipay's COD solution will allow merchants to receive payments within 24 hours of delivery, faster than the current industry practice which can take several days.'
Alipay has estimated that most COD transactions on the mainland are paid in cash. It said less than 20 per cent of the mainland's top-100 online business-to-consumer merchants were able to accommodate credit card or debit card payments upon delivery to a buyer.
At present, merchants rely on COD payment models in which the logistics and payment information are kept in two separate systems.
'Alipay is working with Landi Commercial Equipment to build and install the new COD devices,' Alibaba spokeswoman Dora Chai said.
Based in Fujian province, Landi Commercial Equipment is the largest provider of electronic payments terminals and payments-related software on the mainland.
Alipay plans to roll out an initial 10,000 COD devices in the first half of the year, covering services in first-tier cities, such as Beijing, Shanghai, Guangzhou and Shenzhen. New York-listed Dangdang, an online seller of books, audio and software on the mainland, has already started installing the COD devices, according to Alipay.
Research firm Analysys International estimated that Alipay, which provides an escrow payment service for online buyers, has a 46.9 per cent market share on the mainland. That was ahead of the 21.4 per cent share of its closest rival, Tenpay.
Daily transactions processed by Alipay in December, the company said. It has partnered with more than 100 financial institutions