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Why is Third-party Payment Essential in China?


This is the 2nd part of our “Online Payment in China Blog-post Series“. In the last post, we discussed the payment preference landscape for China e-commerce. In this post we will explain why you need to offer third-party payment in China.

 

Why is third-party payment essential in China? 

third-party payment in China- Observer Solutions Blog

So why is third-party payment so important for Chinese consumers? The answer lies in the fundamental demand of Chinese consumers: safety guaranteed.

Online shopping safety is the key for e-commerce development in China. Third-party payment emerged to solve this problem. Take Alipay for instance, it was first developed by Alibaba to protect its Taobao consumers and mitigate their concerns about online shopping fraud since at Taobao’s early stage, poor quality products were widespread on its platform.

The way Alipay works is partly similar to PayPal in the U.S.. After an online shopper confirms payment for an order via Alipay, the money will be held by Alipay and not transferred into the seller’s account until the consumer informs Alipay to release the payment since he or she received the product and feels satisfied with it. In other words, consumers can cancel payment if the purchases do not go as planned. Alipay will then return the money back into consumers’ accounts if the cancellation application is reasonable or based on the agreement reached by the buyers and sellers.

In this way, third-party payment services provide Chinese consumers with a perfect solution for online shopping safety, both for consumers and sellers, and thus spreading its rapid adoption across China.

Next Wednesday we will explain why Cash-On-Delivery is also an important payment solution in China.

 

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