Alibaba Partners with JPMorgan to Launch Tokenized Payment System by December

Kuo Zhang, president of Alibaba.com, announced the partnership in a CNBC interview on November 14. The new payment system is expected to launch in December 2025.

How the Technology Works

The new system will use something called tokenized deposits. These are digital versions of regular money that exist on a blockchain network. Unlike cryptocurrencies or stablecoins, tokenized deposits are backed by real bank deposits.

“So when the U.S. buyers or euro buyers pay certain amount of euros, it doesn’t need to go around different banks around the world, but it actually is using tokenization and blockchain,” Zhang explained to CNBC. The money can be transferred “simultaneously” to Hong Kong, Singapore, and back to China.

Today’s cross-border payments often take days to complete. Money must pass through multiple banks and undergo several currency conversions. This adds both time and cost to international trade. With tokenized currency, a digital version of that dollar could be transferred directly over a blockchain-based system, bypassing these intermediaries.

Alibaba will use JPMorgan’s blockchain infrastructure called JPMD. This system is designed to move tokenized deposits between large business clients. JPMorgan recently made this technology available on Base, which is an Ethereum-based blockchain network.

Why This Matters for Global Trade

Alibaba’s business-to-business platform connects millions of companies worldwide. The platform handled about $50 billion in gross merchandise value in 2023 and is projecting $60 billion for 2024. That represents a 20% increase in trade volume.

Cross-border payments are a major pain point for businesses using Alibaba’s platform. Companies often wait 2-3 days for international payments to clear. The new tokenized system could reduce this to minutes or even seconds.

The technology aims to solve real problems that businesses face every day. When a U.S. company buys products from a Chinese supplier through Alibaba, the payment typically goes through several banks. Each step adds fees and delays.

JPMorgan’s internal payment network already processes more than $3 billion daily in tokenized payments across dollars, euros, and pounds. However, this mostly happens within JPMorgan’s private blockchain network. The Alibaba partnership marks one of the first times this technology will be used on a public blockchain for such a large-scale operation.

AI-Powered Smart Contracts

Alongside tokenized payments, Alibaba plans to introduce AI-powered smart contracts called “Agentic Pay.” This feature will automatically generate contracts between buyers and suppliers based on their previous conversations.

Today, many business agreements are written offline and uploaded later to Alibaba’s platform. The new AI tool will let both parties confirm automatically generated contracts directly on Alibaba.com before moving forward.

The AI system will also automate settlement, dispute handling, and fund releases once certain conditions are met. This could eliminate much of the paperwork and delays currently involved in international business transactions.

Zhang told CNBC that the company feels “urgency” to use AI to redesign global trade. “We think it’s going to be a paradigm shift for e-commerce for B2B,” he said.

Regulatory Strategy

Alibaba’s approach carefully avoids regulatory issues that have affected other Chinese tech companies. The company will use bank-issued digital tokens rather than stablecoins for regulatory clarity.

In 2023, both Alibaba-affiliate Ant Group and rival JD.com paused efforts to launch yuan-backed stablecoins after China’s central bank discouraged such projects. By using JPMorgan’s bank-backed tokenized deposits instead, Alibaba sidesteps these regulatory concerns.

Tokenized deposits are different from stablecoins because they sit on a regulated bank’s balance sheet. Stablecoins are typically issued by non-bank companies and backed by assets like government bonds. This makes tokenized deposits more acceptable to financial regulators.

Zhang said Alibaba might explore stablecoins in the future, but will first focus on bank-issued digital tokens to ensure regulatory compliance.

Industry Impact

If successful, this partnership could pressure other major e-commerce platforms to adopt similar payment systems. The collaboration brings together two industry leaders: Alibaba’s massive global trade network and JPMorgan’s proven blockchain technology.

Major financial companies including B2C2, Coinbase, and Mastercard have already tested transactions using JPMorgan’s tokenized deposit system. The technology has moved beyond the experimental phase and is now ready for large-scale commercial use.

Other banks are also exploring tokenized deposits. BNY Mellon, Barclays, and HSBC have begun similar projects. The broader trend shows that traditional banks are increasingly adopting blockchain technology for real business applications.

Analysts expect that if Alibaba’s pilot program works well, settlement volume could grow into the billions annually. This would make it one of the largest real-world applications of blockchain technology for international payments.

The Road Ahead

Alibaba’s December launch timeline is ambitious but achievable given JPMorgan’s existing infrastructure. The bank has been developing its blockchain technology since 2015 and has processed billions in tokenized payments.

The partnership represents a shift from experimental blockchain projects to practical business solutions. Rather than creating entirely new financial systems, the technology enhances existing banking infrastructure to make it faster and more efficient.