US payments processer becomes first major partner for payments arm of Alibaba.
The news, a rare partnership between Alibaba and a Western company, will allow Stripe's customers an easier way to handle purchases from China.
Alipay is China's most popular online payment method, and is used for over half of Chinese Internet transactions, meaning that hundreds of millions of new customers will now be able to use Stripe's service.
San Francisco-based Stripe said that the move, due to roll out over the next couple of weeks, was part of its continued expansion efforts into accepting the most popular payments methods around the world.
"About 1 billion people hold one of the cards that Stripe supports today, but these card brands see little usage in China," Stripe lead engineer Christian Anderson wrote in a company blog post announcing the partnership.
"Alipay, on the other hand, is used by hundreds of millions of Chinese consumers. We're building a universal platform for internet commerce."
AliPay users can now use their email address and a six digit SMS code to but items from companies that use Stripe to process payments, rather than using a different site.
Existing Stripe customers will not need to change any of their details or payment methods, with Chinese customers simply needing to enable Alipay as a payment method before seeing it appear at the checkout phase.
Alibaba, which is set for possibly the world's largest IPO later this year, recently launched a US site, 11Main, targeting small retailers based in the country. Although the site currently only operates in the US, the company said it would be open to accepting AliPay and selling to overseas customers as well in the future.
Formed three years ago by brothers Patrick and John Collison, Stripe has grown quickly during its lifetime. In January, the company raised $80m from venture capitalist investors, which allowed it to expand from 90 to around 130 workers and valued it at $1.75bn.
With offices in 14 countries, it clients include Rackspace, Foursquare, and ride-sharing service Lyft, and counts Sequoia Capital, General Catalyst Partners and Khosla Ventures among its main investors, and has also received backing by three of PayPal's co-founders, including current Tesla Motors CEO Elon Musk.
Source: Company Press Release