China’s Online Travel Market Expected To Reach US$23.6 Billion This Year
This week, Alipay (支付宝) — China’s largest third-party payment processor — launched a new online travel escrow service, allowing travelers in China to complete payments for their trips after returning home. Launching first as a pilot program in Hangzhou, Beijing, Sanya and selected cities in Sichuan province, the “play before pay” service will be extended nationwide next year.
According to the consulting group iResearch, China’s online travel market reached 100 billion yuan (US$15.7 billion) last year, and is expected to total upwards of 150 billion yuan (US$23.6 billion) in 2011. Looking to carve out a larger share of the country’s fast-growing online travel market, Alibaba-affiliated Alipay lets customers who purchase travel products like group or individual packages sign an electronic contract with travel agents or service providers, then Alipay holds the payment in escrow. This effectively reduces transaction risk for online customers, which has traditionally been a hangup for many Chinese shoppers who have traditionally been wary of e-commerce.
As Fan Zhiming, vice president of Alipay, said of the new initiative, “Consumer rights are often taken advantage of by online travel sites, travel agencies, hotels and other services. This new online travel escrow service is designed to protect consumer interests, while helping to build the credibility of the online travel market in China.”
In China’s e-commerce market, trust is everything. The new “play before pay” concept takes this into consideration by allowing travelers to verify their satisfaction with their trip and experience before granting funds to the seller. Within three days of the travelers’ return home, Alipay unfreezes the funds and completes the transaction, given both parties were satisfied. If customers dispute the charges within three days after returning home, Alipay will assist them in lodging complaints with the seller, working closely with the Tourism Bureau and industry associations to solve the conflict. As more Chinese travel further afield, many of them booking trips online, we’ll likely see this type of escrow-based e-commerce