EBay's PayPal to stop service on Alibaba site

PayPal will halt its service on AliExpress in August

EBay's PayPal will no longer be a payment option on a site run by Chinese e-commerce giant Alibaba Group, a sign that cooperation between the two companies may be cooling.

PayPal announced on its blog Friday that after August 3, the company will halt its services on AliExpress, a wholesale supplier site that Alibaba launched last year. PayPal did not address the reasons for the move in the blog post, and only said the decision was made after evaluating the company's programs and partnerships to improve its services. PayPal could not be reached for immediate comment.

AliExpress offered PayPal on its site as way to provide more payment options for users. AliExpress works as an English-language site meant for small to medium-size businesses that want to source products from Chinese manufacturers. Many of the site's buyers come from the U.S., U.K., Australia and Brazil, according to AliExpress.

But the partnership between AliExpress and PayPal was also one of the first signs of cooperation between eBay and Alibaba, which have often been seen as rivals. Alibaba has grown to become China's largest e-commerce company, beating out EBay's attempts to grow its presence in the Chinese market.

Last year, relations between the two companies appeared to grow even cozier when the CEOs of both companies spoke at an Alibaba-hosted event and mentioned they would explore partnering. The heads of the two e-commerce giants both said they believed they had an opportunity to help eBay buyers connect with sellers on Alibaba.

In response to PayPal's announcement Friday, Alibaba said in a statement that the company would continue to strive to offer different payment options on its AliExpress site.

Alibaba also has its own online payment service Alipay, which dominates the Chinese market. But the service has been involved in a dispute that has threatened to further damage relations between another U.S. Internet company -- Yahoo.

Yahoo owns a 43 percent stake in Alibaba. But the value of that investment is at risk of being devalued after Alibaba transferred ownership of Alipay to a company under Alibaba CEO Jack Ma.

Yahoo and Alibaba are currently in talks over how compensation will be provided for the loss of the Alipay business.

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Michael Kan

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