BEIJING (AFX) - EBay Inc will launch its online payment system PayPal in China by the end of the year, according to an EBay China spokeswoman.

But EBay's chief rival, Alibaba.com, which operates its own online payment service, AliPay, is unconcerned about PayPal's entrance into the field.

"We're ready, we're prepared and not very concerned because they've got a lot of catching up to do," said Porter Erismann, vice president of corporate marketing for Alibaba.com.

Ebay, which had first-mover advantage in China's online auction market, had originally scheduled its launch of PayPal for the first quarter of this year.

AliPay, an online escrow service, was originally launched on Alibaba.com's C2C auction site Taobao.com in October of 2003. The service was made available to all merchants in China in May of this year.

AliPay saw its average transaction volume increase by 64 pct each month of 2004, with transaction volumes rising by 123 pct from the fourth quarter of last year to the first quarter of 2005, according to data from Alibaba.com.

The service had a transaction volume of 12 mln usd in March, and 2.4 mln registered users as of June 10 this year.

But Ebay downplayed their late entry to the China online payment market.

"We think that for China, the online payment or e-commerce market is still at the early moment, so we don't think we are late," said Lillian Liu, a spokeswoman for Ebay China.

"We're really the most advanced online payment solution in the world, so we are very confident about this product," she added.

Ebay's total global transaction volume, initiated by PayPal, grew to 6.2 bln usd in the first quarter, compared to 4.3 bln usd in the same period the previous year, according to Ebay's first quarter earnings report.

Ebay initially entered China's online auction market by purchasing a 33 pct stake in Shanghai-based Eachnet for 30 mln usd in 2002. Ebay purchased the remaining 67 pct stake in July 2003 for 150 mln usd.

Ebay dominated China's online auction market last year with an 80 pct share. The company has also said it plans to spend 100 mln usd building its brand in China.

Speaking earlier this year at a conference in Beijing, Ebay CEO Meg Whitman said China will be Ebay's biggest market in five to 10 years.

john.bishop@xinhuafinance.com

jpb/dk