Alipay to become world's No 1 e-payment firm

* Alipay set to become world’s No. 1 e-payment firm in 2 yrs

* To expand in Southeast Asia as first major overseas push

* China’s e-commerce industry to reach 1.4 trln yuan by 2015

(Adds details, quotes and background)

By Melanie Lee and David Lin

SHANGHAI, Nov 24 (Reuters) - China's No. 1 online payment firm Alipay is expected to top eBay Inc's EBAY.O unit, PayPal, by transaction value in two years, to become the world's leading e-payment service, Alipay's president on Tuesday.

Alipay, a unit of Alibaba Group which owns China's largest e-commerce website 1688.HK and China biggest online retailer Taobao, says it handles more than 1 billion yuan ($146.5 million) in transactions daily, and will reach an annual transaction volume of 1 trillion yuan in two years, topping PayPal and becoming the world largest e-payment firm.

“I think by 2011 there is a possibility of that happening,” Polo Shao, president of Alipay, told Reuters in an interview.

PayPal, which handles $2,000 per second in transactions, would handle $63.1 billion in transactions this year, according to Reuters calculations.

Alipay has more than 180 million users daily whereas PayPal has 75 million active users.

Alibaba Group is 40 percent owned by U.S. search titan Yahoo Inc YHOO.O.

China, home to the world’s most populous Internet market, is seeing an e-commerce boom as buyers look to the web for better deals from more reliable suppliers in the country’s highly fragmented retail sector.

Alipay had more than 50 percent of China e-payment market in the third quarter, according to data from research firm Analysy International. Transaction value was 1.6 billion yuan in the third quarter.

“We expect Alipay to remain the largest online payment platform in China in the near future,” Wallace Cheung a Credit Suisse analyst said in a research note.

Credit Suisse estimates that China’s e-commerce industry will grow to 1.4 trillion yuan by 2015 based on merchandise value.


Alipay, which already has merchants overseas using the service, will make a push into Southeast Asian markets over the next two years to expand the firm’s footprint.

“I think Southeast Asia will be the most suitable to expand into because users’ culture, taste in goods and language have a lot of similarities,” Shao said.

Alipay, which declined to give revenue figures, said it was already profitable and generates revenue by charging the merchant fees. The firm has no plans to list in the next two or three years and will focus on expanding its business domestically and overseas.

“Alipay will definitely be an international company. It is not the principle of the Internet, for an Internet business to just operate in one area,” said Shao.

“Expanding abroad is a path we have to walk.”

($1=6.828 Yuan)

(Reporting by Melanie Lee and David Lin; Editing by Jacqueline Wong)

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