US Internet giant eBay launched its online payment service PayPal in China Monday in an attempt to give a boost to its development of e-commerce in China,

PayPal, a wholly-owned subsidiary of eBay, said Monday that it had partnered with China Pay, an official online payment operator in China, to offer online payment services in the world's second largest Internet market.

"This is a very special and important moment since we started to introduce PayPal to non-US markets in 2003," said Mathias Entenmann, vice-president of the US online payment company's international business.

China has become the first Asian market eBay has introduced to its online payment service in the region.

PayPal claims that security, speed and convenience are the three major draws it can offer. It also allows users to send and receive payment through an e-mail address.

By the end of the first quarter PayPal had 72 million users worldwide, with the volume of total transactions reaching US$18 billion last year, about 9 percent of the total e-commerce transactions in the United States and 5 percent of the global total.

In China, PayPal has partnered with China Pay, the online payment arm of the country's official band card information switch centre, China UnionPay.

Zhou Ye, general manager of China Pay, said that in the cooperation, China Pay provides a cross-bank payment platform and its certified shops, while PayPal acts as an important payment tool for consumers to buy products and services from the Internet and certified shops of China UnionPay.

Chinese Internet companies NetEase.com Inc and Tom Online, as well as Kijiji.com, an online classified ads website of eBay, became the first partners to accept payment from PayPal in China.

However, eBay Eachnet, the Chinese arm of eBay, will become the biggest beneficiary of the introduction of PayPal, which is expected to formally launch in September.

"It is just like a tiger getting a pair of wings," said James Zheng, chief operating officer of eBay Eachnet, citing an old Chinese saying to describe the huge help of PayPal.

The development of e-commerce in China faces bottlenecks in the areas of payment, logistics and credit, and the introduction of payment tools like PayPay will make payments easier and encourage more people to try e-commerce.

Ebay Eachnet already has an Escrow service in China, which allows buyers to send money to an account of eBay Eachnet. Sellers, meanwhile, can only access remittances from the account once a buyer verifies the products. The move is aimed at curbing fraud, but of necessity means it takes much longer to receive payment. With PayPal, however, remittances are instant.

To meet the requirements of the Chinese market, PayPal will offer free services to Chinese users for some time, but Entenmann declined to say when it will begin to charge users. It usually charges around 2 percent of the transaction price in other parts of the world where it operates.

(China Daily July 12, 2005)