Until just the other week, no-one in their right mind would have contemplated allowing an online service of which they had never heard to access their bank or credit card details, in order to speed the payment of goods bought on the web.
But the participation of a trusted British bank – Barclays, no less – in a Chinese mobile payments operation has given it an unexpected credibility.
Trust is relative in banking terms, of course, but nevertheless, the platform known as Alipay – a sort of Chinese Barclaycard and PayPal rolled into one – is now available on this side of the bamboo curtain, in shops, restaurants and hotels as well as on websites.
The main market is Chinese tourists to Britain, for whom York is a favourite destination. Across the country, around £1bn is expected to pass from their accounts to local businesses this year.
But it’s a two-way street. The China-based marketplace run by Alipay’s parent company, the Alibaba Group, is a virtual street bazaar of everything from electronics to lawnmowers, retail and wholesale, in every major currency and to almost any country. The firm is said to have assets of more than £86bn and its app has some 500m users.
Its size makes it a safe and reliable source of merchandise for buyers in Britain, though not a convenient one. Possible customs duties on goods you import may quickly offset the savings on the ticket price, and the speed of delivery is obviously not going to be optimal.
But its migration from foreign website to local high street is a measure of the globalisation of commerce and the proliferation of unfamiliar payment platforms.
Google and Amazon also have their own PayPal alternatives, and TransferWise, 2Checkout, Skrill and Stripe are among the other names out there.
It’s a good business model, because quite apart from taking a cut from vendors, they can earn interest from your money while it’s in their systems. There is nothing to suggest that any of these services is in any way risky, but neither do they offer much of an advantage, since every reputable retailer also accepts payments from regular banks, from whom there is an easy recourse in the event that anything goes wrong.
This is something worth bearing in mind if you use any intermediary, PayPal included, to pay for expensive goods on your credit card. Many buyers do this because they have read that the Consumer Credit Act makes credit card companies jointly liable with retailers for anything costing between £100 and £30,000. That applies in a shop or online – but not when the transaction isn’t made with the card company directly.
PayPal offers a protection scheme of its own in many circumstances, and it is most people’s default payment mechanism on Ebay, its former parent company. But that doesn’t make it a bank.
So here’s a quick sense-check – it may be counterintuitive not to use the “one-click” payment methods of which online retailers are so fond, but for a significant purchase to which you are committing on the basis of having shopped around, it makes sense to also pick and choose the best payment method.
As a golden rule, never pay for anything on a website that doesn’t display a padlock icon in your browser’s address bar. And when you do pay, consider the few seconds you save in not having to enter your card number every time, as a trade-off against the possible risk later on.