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AliPay is a payment solution started by Alibaba, the Amazon of China (for lack of a better description). It works a lot like PayPal and makes it easier for Chinese consumers to purchase from international retailers.

Chinese consumers can keep a virtual wallet in Yuan, and make payments in foreign currencies. Alipay looks after the exchange and merchants are paid in their home currency. This opens the door for the growing Chinese middle class to get their hands on international name brands.

As a merchant, this works just like any other payment method with AliPay taking between 2% & 3% depending on your transaction volume. One hitch is that the settlement limit is $500 USD so depending on how much business you do, it might take a while for you to get your money out of AliPay.

Do you need it?

Payments are only one piece of the puzzle when growing your international e-commerce. If you are large or aspirational brand (Lululemon, Canada Goose, Herschel) already doing business internationally then yes, you will want to implement AliPay.

For other brands and retailers, the decision is not quite so clear. As this is a product clearly aimed at residents of China, if you have stores in places frequented by newly affluent Chinese tourists, then both the instore and online payment method could be worth it and help build brand loyalty. If your product is distinctly Canadian then yes you could create a market in China with it, but it will not be a goldrush. If you want to pursue the Chinese market, then you will need to market directly to them and we always recommend localizing your content by using the local language.

What AliPay Isn’t

AliPay is not a freight forwarder or shipper and it does not reduce your risk of doing business internationally.  All AliPay takes care of is the payment, the rest is up to you. How comfortable are you shipping products to China? AliPay does have a customs document solution to make things easier but there is nothing on their site that indicates that they reduce your exposure to fraud similar to the Seller Protection offered by PayPal.

Our recommendation is that unless you are already doing business with Chinese consumers, or are willing to invest in systems, processes, and marketing to open up that market, you should take a wait and see approach.

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