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The biggest U.S. processor of card transactions announced on Thursday it has started processing credit card payments in the U.S. for the massive Alibaba.com online marketplace. As part of the arrangement, J.P. Morgan Merchant Services said it is working with the mobile and online payments provider Alipay to manage transactions on the massive business-to-business platform.
China-based Alibaba Group Holding Ltd., which operates Alibaba.com, holds a 33% stake in Alipay.
Chase Merchant Services pointed to a potentially massive opportunity in processing card transactions between businesses operating on the Alibaba marketplace. The deal is also expected to help Alibaba.com increase its share of payments by U.S. firms.
“J.P. Morgan is proud to be the only global bank that can manage the payments lifecycle for marketplaces—from when a customer makes a purchase, to accepting and storing that value, to ensuring that the funds reach the seller’s bank accounts,” said Takis Georgakopoulos, global head of wholesale payments at the bank, in a statement. “We are thrilled to begin processing payments for Alibaba.com as they continue to expand in the U.S.”
The opportunity for Chase could be enormous. Online marketplaces controlled nearly half of all e-commerce volume last year, according to information the company cited Thursday. The collaboration is expected to help small businesses, in particular, in managing a variety of payment methods. It is also expected to help Alibaba.com in increasing its business in the U.S. market. “We’re delighted to be partnering with J.P. Morgan on digital payments to help empower small- and medium-sized businesses in the U.S. to pivot to digital and go global,” said Douglas Feagin, an Ant Group senior vice president who runs global and partnerships and investments for Alibaba.com, in a statement.
J.P. Morgan Merchant Services is the largest merchant processor in the United States, having processed $1.6 trillion in volume last year, according to data from The Strawhecker Group, an Omaha, Neb.-based payments research firm.
Founded in 2004, Alipay has grown into what is said to be one of the largest mobile-payments services globally. It has also made prior moves to penetrate the U.S. payments market, including a deal with the Guess? Inc. chain in 2018. Before that, it had concluded a deal to collaborate with the big U.S. processor First Data Corp., now part of Fiserv Inc., to process mobile payments for U.S. sellers that attract significant numbers of Chinese tourists.
