58.com, one of the leading and kind of troubled Chinese classified listing sites, has implemented the escrow payment solution Alipay developed tailored to it. 58 users, therefore, can, like most of them are doing on Taobao, decide whether to release the payment after having enjoyed a service or bought a second-hand item. It will enable second-hand good sales first and then other categories of goods and services.

It is the very first time Alipay developed such a custom solution for a third party. It’s undisclosed whether Alipay starts receiving transaction fees or how much it is if it does.

The process is exactly like that with Taobao and Tmall: after a user makes a payment, the platform will withhold it and notify the seller of the order. If the user was satisfied with the service and let the system know by clicking on a button, the money would automatically be transferred to the bank account of the seller’s; or, the user can request a refund. If a seller didn’t deliver promises, 58 would step in to deal with disputes.

A survey conducted by 58 shows that 90% of its users trust Alipay and 75% have Alipay accounts. Trust and convenience must boost transactions completed on the platform. The effect could be even more obvious than that with Taobao years ago. Back then Chinese didn’t trust online retailers on Taobao and online shopping as a whole. To tackle it, Taobao came up with the escrow mechanism and named it Alipay. Now Alipay is dominating the digital payments market in China and processed 1.1 billion yuan in transactions through Taobao and Tmall in 2012 — people are spending money there as freely as they want.

Prior to today, 58.com, like its peers, makes revenues from advertising, display slots and paid search, and premium merchant-facing services. And, they are in trouble. With the payment solution in place, 58.com can earn transaction-based commissions from the deals. It is said that the classified listing market in China is about 75.5 billion yuan (US$12 bn) . Wish 58 good luck that it could take a piece there.

Potential trouble source must be disputes. As most items sold on 58 are services or the second-hand, buyers would be more likely to feel unsatisfied with those than standard goods sold on e-commerce sites. It’d be much harder to settle disputes.



Tracey Xiang is Beijing, China-based tech writer. Reach her at traceyxiang@gmail.com

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