Private investment firm Comvest Partners acquires the financially troubled e-retailer, which filed for Chapter 11 bankruptcy protection in March.
CyberSource Decision manager helps Alipay minimize fraud in cross-border transactions.
Chinese online payment services provider Alipay, a unit of Alibaba Group, has expanded its relationship with CyberSource Corp., a provider of payment processing and payment security technology and services, to improve fraud-management practices across the entire Alibaba e-commerce portfolio, the companies say.
The venture began with Alibaba’s cross-border e-commerce site, AliExpress. Since integrating CyberSource’s fraud-detection system Decision Manager with its existing in-house fraud-management system in 2010, Alipay has been able to maintain low fraud rates for its cross-border business-to-consumer online business, Alipay says. It did not specify the fraud rate. Facing growing threats in online payment fraud, Alibaba and CyberSource decided to expand their partnership to Alibaba’s large online marketplace Taobao.com, according to CyberSource.
China-based Alibaba Group is the dominant e-commerce operator in China and No.1 of Internet Retailer Asia 500 Guide, while CyberSource is owned by Visa Inc.
Online fraud cost Chinese consumers at least 30.8 billion yuan ($4.8 billion) in 2012, and 63 million online shoppers were victims of fraud, according to the China Electronic Commerce Association. The research from Visa Inc. shows that transaction security is a key concern for 56% of Chinese consumers surveyed when making online payments. Based on the 60 billion transactions processed by Visa and CyberSource annually, CyberSource is able to help Alibaba pinpoint fraud faster, more accurately and with less manual intervention than under Alibaba’s prior risk management system, CyberSource says. CyberSource Decision Manager runs 260 validation and correlation tests for each transaction in only a few seconds, the company says. Alibaba didn’t provide further details about the performance improvement after adopting CyberSource services.
"Alibaba and Alipay are growing rapidly and expanding on a global scale. With this in mind, we need to protect the business against the risks of global fraud," says Tu Jianwei, senior director, Alipay. "The implementation of CyberSource Decision Manager and Managed Risk Services allows us to better understand best practices in global risk management and build an efficient system for our extensive user base.”
Alibaba has over 2000 employees working on transaction security, the company says.
"Successful e-commerce companies want to sustain and grow their businesses in the large and highly competitive Chinese e-commerce market with confidence," says Poon Khye Wei, regional director for greater China and Korea at CyberSource. "We will also be extending our partnership with Alipay to support its drive towards offering merchants a complete online payment experience through a global payment gateway solution."
E-commerce transactions between China and other countries increased 32% to 2.3 trillion yuan ($375.8 billion) in 2012, according to Chinese research company iResearch. Besides Alibaba, CyberSource also provides services to two leading Chinese cross-border e-commerce sites, DHgate.com and DX.com, and three electronics payment companies, Shenzhen Tenpay technology Co. Ltd., a division of giant Chinese Internet company Tencent Group; PayEase Beijing Technology Ltd. and 99Bill Corp.