MasterCard Teams With China’s Largest E-commerce Giant

by Terry X Xie 0

MasterCard last week signed a memorandum of understanding withAlibaba Group, the largest B2B and C2C e-business in China. Theobjective of the agreement is to enhance the e-commerce environmentto benefit consumers and small businesses within and outsideChina.

Alibaba Group owns alibaba.com, the leading international B2Bportal that enables small businesses in China to sell to buyersaround the world. There is also taobao.com, the dominant C2C andB2C portal in China with sellers being individuals and smallbusinesses. In 2012, taobao.com recorded over CNY1 trillion insales, or about USD$161 billion. Though Taobao’s users are mainlylocated within mainland China, more and more consumers in otherregions, especially Taiwan and Hong Kong, are also attracted to thewebsite for better product selections and prices.

The partnership with MasterCard is expected to help Alipay betterserve consumer and company buyers around the world. In China, it ispossible MasterCard can crack into the booming e-commerce market inChina by some kind of online acceptance agreement with Alipay, thedominate online payment company and a subsidiary of Alibaba Group.Alipay controls nearly half of the online payment market in Chinawith over 100 million active users. Only a small portion of theseusers have a MasterCard, but they tend to be among the mostaffluent buyers online.

MasterCard, alongside Visa, have been continuing to crack into thedomestic card market in China. The progress has been limited forthe most part. But with the WTO ruling in 2012 which stated Chinais treating foreign payment companies unfairly, things are startingto move again.