China's Alipay shutters POS service for small companies - report

SHANGHAI Tue Aug 27, 2013 9:46pm EDT

SHANGHAI Aug 28 (Reuters) - Alipay, a unit of Chinese e-commerce giant Alibaba Group, will stop its offline point of sales (POS) service for small companies, the official Shanghai Daily reported on Wednesday.

The company, China's biggest third-party payment service provider, said it had halted the service for "obvious reasons", without providing further details, but added that it will proceed with pay services in the future, the newspaper said.

Alipay is the primary electronic payment system used for transactions on the massive Taobao online shopping platform - commonly referred to as the Chinese version of eBay - which is also owned by the Alibaba Group.

The report cited market rumours that state-owned China UnionPay had put pressure on Alipay to route its POS service through UnionPay's system so it could increase its commission earnings on transactions.

UnionPay declined to comment.

In 2012, the World Trade Organization ruled that China had unfairly discriminated on behalf of UnionPay at the expense of foreign competitors, in particular MasterCard Inc and Visa Inc, and it has attracted domestic accusations of monopolistic behavior.

Alipay said in an unrelated notice that third-party payment companies that link directly to commercial banks could unintentionally facilitate online fraud and money laundering. The company has intensified efforts to make third-party services more standardised in order to control risks, according to the newspaper's report.

In 2012, Alipay, Tenpay (operated by Internet portal Tencent Holdings Ltd ) and UnionPay dominated the third-party payment market, with market shares of 46.6 percent, 20.9 percent and 11.9 percent respectively, according to data from Analysys International.

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