Home Fintech How Alipay solve trust problem in C2C business?
How Alipay solve trust problem in C2C business?

How Alipay solve trust problem in C2C business?


How Alipay started

From Alibaba group, at the beginning of the establishment of Taobao, the team was full of agility and quickness. Everyone worked hard and energetically. The entire website was also very active. Many users posted on the forums and the user consultation business was also very enthusiastic. However, there was no transaction, among which An important issue is the lack of trust between buyers and sellers.

In the traditional Chinese business thinking, it is perfectly justifiable to “pay with one hand and deliver with one hand”. However, this traditional trading pattern has encountered problems in online transactions. The seller worried about the delivery of the goods but did not receive the money; the buyer worried that the money was paid but did not receive the goods. Users for the entire online transaction this model is very cautious, but at the time did indeed appear some fraudsters did not ship the money and fled.

Affected by this, a lot of early Taobao transactions are conducted in the same city. For example, the buyers in Hangzhou captured the goods of the same city sellers on the Internet. Afterwards, the parties agreed that the transaction should be handled offline. At this time, the traditional transaction mode of “one-handed payment and one-hand delivery” was still used. To reduce the risk of users being deceived, Taobao also encouraged this “online order, offline transaction” approach, but the limitations of this transaction are very large. For example, a buyer in Guangzhou and a seller in Hangzhou is very difficult to achieve the transaction.

Therefore, Taobao if you want further development, we must first establish a mutual trust between buyers and sellers.

Taobao head is very anxious to find a solution to the problem. In order to find a solution to the problem, he read a lot about online payment security information, but also allow the team to continuously collect information to understand PayPal foreign peer payment, but found that this does not solve the problem. He also thought of imitating Tencent Q coins come up with a Taobao currency, and later found that no.

Once, Taobao head visit the forum found that not only Taobao team for this headache, Taobao community buyers and sellers are also discussing this issue, he took the initiative to post and discuss these users. One after another to go, his ideas become clearer and clearer. Taobao head think, since the user is most concerned about the money, then as long as the funds to ensure security, users dare to use Taobao. Therefore, if we can launch a payment tool based on secured transactions in Taobao, the problem will be solved.

The awaken of solution

The so-called “secured transactions” refers to the buyer after placing an order, the money first into a third-party account managed by the bank (Taobao in the bank’s public accounts), Taobao received the buyer’s payment information, the notice Seller shipped, the buyer received the goods and confirm the goods match the description, Taobao will hit the seller money.

In fact, this mode of secured transactions has been tried in B2B transactions in Alibaba, but the transactions between enterprises and enterprises are much more complicated than the transactions between individuals. There are obvious differences between the payment methods and the logistics methods. Therefore, This model has not been promoted in B2B transactions, but Taobao’s startup team feels this transaction model may have a hand in C2C trading.

In the history of human development, the establishment of a relationship of trust has always been an important one as it relates to the development of trade and human cooperation. The Israeli scholar Juvar Herali wrote in his best-selling book A Brief History of Humanity: “Without trust, there can be no trade, and it is very difficult to believe in strangers, and today there is a global Trade networks, precisely because we believe in some virtual entities, such as the US dollar, the Federal Reserve Bank, and the trademark of a business.

These young people in Taobao inadvertently explore, touched the essence of finance. The foundation of finance is the transaction, the essence of the transaction is the trust mechanism, and the secured transaction provides exactly such a trust mechanism. With the trust, strangers can do business, business behavior will be able to break the geographical restrictions, its role should not be underestimated. In many countries, the reason why e-commerce can not develop is because of the lack of innovative mechanisms. Until today, Taobao still maintains the guaranteed payment transaction mode, which has become the basis for Taobao to set itself up for its own life. No one dares to imagine what kind of Taobao would lack in secured transactions.

From a product perspective, secured transactions are not a major innovation, but a change in transactional processes, but sometimes breakthrough innovations start with small, startled innovations that have opened up a new era of e-commerce in China, Become the starting point of Alipay venture.

As Harvard Business School Ernest L. According to Rosabes Moss Kanter, professor and chair of business administration at Abkhaz, “Some companies have taken the wrong tactics when they innovate, believing that only new products are innovative, and that new services and process improvements are not innovations , Rejecting those first-glance opportunities, but in fact many small innovations can bring huge profits and substantial changes to the company. ”

At that time, Taobao head their brains go for this idea, Taobao team also adopted the user’s opinion on the forum. Innovation in secured transactions is the result of brainstorming by all Taobao owners.


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Patrick Goh Mr. Patrick Goh B.S is a research engineer with more than 10 years in industry of IT, Engineering and Financial market experience. In 2013, he joined financial institute’s research team as R&D software engineer mainly researching on technical analysis, inter-market correlation and fundamental factor in leveraged trading instrument using machine learning technique and programming algorithmic trading strategy by quantifying trader sentiment behind the price movement.


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