China's largest e-commerce firm Alibaba.com said it will offer e-payment services on its new online commerce platform from eBay's PayPal, in the first such tie-up between the former arch-rivals.

Alibaba.com said in a statement on Tuesday that PayPal services will be offered on AliExpress, its new wholesale website now in beta-testing. PayPal allows customers to safely conduct monetary transactions across borders.

The tie-up is the first for the former rivals, which once waged a bitter war in China's online auction space that later saw eBay largely withdraw from the market by putting its business into a joint venture run by Hong Kong's Tom Group.

Both companies were chasing a piece of China's booming 1.5 billion yuan ($219.7 million) e-commerce market.

Alibaba.com's parent, in which Yahoo Inc owns a 40 percent stake, runs China's largest e-payment service Alipay and its largest online retailer Taobao, which still competes with the Tom Group-operated EachNet service.

Alibaba.com told Reuters earlier this month that it expects revenue growth to accelerate this year as it expands, pressuring margins that should start to improve in 2011.

The firm competes with Global Sources in China's business to business (B2B) marketplace industry.

Web commerce in China has surged in recent years, as buyers look to the Internet for better deals from more reliable suppliers in the nation's highly fragmented e-commerce sector.

($1=6.826 Yuan)

(Reporting by Melanie Lee; Editing by Jacqueline Wong)

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