Alibaba partners with Octopus for NFC based online payments

Alibaba’s subsidiaries Taobao and AliPay have partnered with Hong Kong’s MTR’s Octopus Holdings Ltd., to bring NFC based transactions to online Payments .

Octopus Holdings Ltd distributes the highly accepted Octopus card, a reusable contactless stored value smart card for making electronic payments in online or offline systems in Hong Kong. The joint venture will let users of Octopus’ mobile application pay for goods on Mainland China’s Taobao virtual mall.

The payment application will work only on NFC enabled devices. How or why it will need NFC is unclear. We speculate the reason to be either because of the security element and identification associated to NFC enabled phones, or will allow the user to simply touch the back of the phone with an Octopus card to complete the transaction.

AliPay integration is necessary to complete Taobao purchases, which rely on the payment method. Alipay has surpassed other international payment giants, most notably PayPal, and has processed over 900 billion yuan ($148.4 billion) through mobile phones in 2013.

The collaboration with Octopus, along with the soon to be launched US marketplace, and plethora of new features added to Alipay’s mobile application shows the Ecommerce giant’s desire to aggressively expand prior its highly anticipated IPO.