Alipay's spare money business stirs online investment

Alibaba Group, founded in 1999, provides services for Internet users in countries and regions across the world.

It announced at the end of 2012 that total transaction volume at the group's online shopping platform Taobao.com exceeded 1 trillion yuan by November, or 5.4 percent of the country's retail sales for consumer goods in 2011.

Considering Alipay provides an online payment service for Taobao.com, a large amount of spare cash stays in Alipay accounts of Taobao users.

"I spent 78 yuan in my Alipay account to buy shares in the fund," Li Xiaoying, a Hangzhou citizen in east China's Zhejiang province, said. "This convenient business of investment caters to common people like me."

Zhou Xiaoming, vice general manager of TIANHONG Fund, said, "The annual yield stayed between 3 and 4 percent in 2012, higher than the yearly bank deposit interest rate and with relatively low risk."

Caijing.com.cn, a website expert in financial information, said in its official Sina Weibo, China's most popular microblogging service, that an investment of 100,000 yuan can earn 4,000 per year based on the current profit rate, while deposit interest was just 3,500.

Luo Changping, deputy chief editor of Caijing Magazine, praised Ma Yun as a hero against financial monopoly.

Fan Zhiming, president of domestic businesses of Alibaba's small and micro financial sector, said the innovative business attracts spare money from many young online consumers with limited capital and financial knowledge, which benefits both these Alipay users and the company.

"This is one small step for Internet financial progress, one giant leap for the fund industry," Fan added.

However, analysts said Alipay's new business involves investment and financing, so risks are inevitable.

The business model is expected to be imitated by Alipay's competitors, even when the leading giant takes up nearly 50 percent of the market share in online payment service sector. h A famous investment microblogger "fengyuxiahuangshan-huangsheng" criticized Ma Yun for deceiving consumers through a deposit-like investment method with possibilities of losses, calling for further regulations.