Online service to gain more ground in financial market

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When Hangzhou resident Cheng Zheng, 24, decided to set up a shop on taobao.com this March, he considered borrowing from commercial banks, but dropped the idea to avoid the time-consuming application process. In the end, he turned to his relatives to get the start-up capital of 20,000 yuan ($3,267).

"Those were the only two choices I considered," Cheng said.

In fact, he had more options than he thought, with a number of Internet service companies, ranging from e-commerce juggernauts such as Alibaba Group to small private firms including Chengdu Edai Internet Technology Company now offering online financial services.

According to an Essence Securities study cited in an Economy & Nation Weekly report, the trading volume of the online lending industry reached 20 billion yuan in 2012, and the figure is expected to jump to 60 billion yuan this year.

Alipay.com, a third-party online payment platform operated by Alibaba, is planning to introduce a "pay by credit" service this week.

The service allows users to pay for online purchases with overdrafts from their Alipay accounts, which is bundled with the popular Taobao marketplace's customer accounts, instead of using credit cards or debit cards.

Market observers said the move, which came on the heels of Alibaba's launch of China's first investment platform for online shoppers, Yu'ebao, on June 13, indicates that Internet service companies are furthering their role and gaining more ground in the financial market.

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