China's Alibaba to start charging

SHANGHAI (Reuters) -- Alibaba.com, China's largest e-commerce company, will soon start charging some users of its free Alipay online payments service as it seeks new sources of revenue.

Users of Alipay who are not doing business on Alibaba's Taobao auction site will have to pay "technical service fees" from the start of 2007, Alipay said in a brief statement seen on Sunday. Taobao customers will continue to use Alipay for free.

The new charges will help to "standardise the electronic payments market and promote the healthy development of the industry," Alipay said.

It did not reveal the size of the fees but Chinese Web-based media quoted businessmen affected by the change as saying a typical fee would be 1.5 percent of the total value of each purchase and Alipay would start levying the charges in February.

Alipay says it has over 20 million users who conducted more than 250,000 trades worth an average of 40 million yuan ($5.1 million) a day in June and more than 200,000 users who were not doing business on Taobao.

Online payment services and Taobao, which has displaced eBay as the biggest online auction site in China, contribute less than 20 percent of Alibaba's revenue, which depends mainly on the company's core business-to-business services and to a much lesser extent on its Yahoo China Web site.

But Jack Ma, Alibaba's founder and chairman, told Reuters in September that he hoped Taobao-related services would contribute 30 percent of revenue by around 2010 or 2011.

Alibaba's revenue in the first half of 2006 was about $100 million, matching the figure for all of last year, and the firm expects total revenue to hit $1.25 billion by 2009. Yahoo Inc. (Charts) bought 40 percent of Alibaba last year for $1 billion.

Earlier in December eBay (Charts) said it was folding its Chinese operations into a new venture controlled by Tom Online, a Beijing-based Internet portal and wireless services firm partly owned by Hong Kong tycoon Li Ka-shing.

But eBay's chief executive Meg Whitman dismissed speculation that e-Bay's PayPal online payments unit, which set up shop in China last year, would soon announce a joint venture with a Chinese electronic payments firm.