Alipay has withdrawn payment services at traditional stores in China.

The Alibaba Group subsidiary’s spokeswoman, Teresa Li, confirmed the news but declined to elaborate.

Alipay started as an online payment business but expanded its payment services to traditional stores. However, it has been struggling to compete with state-backed China UnionPay, which is boosting its effort to improve services.

It has more than 10,000 devices in stores and it is arranging for banks to serve the merchants on its network.

Rumours say that UnionPay has pressured Alipay to route its POS service through its system to increase its commission earnings on transactions.

Analysys International’s data showed that in 2012, Alipay, Tenpay and UnionPay led the third-party payment market with shares of 46.6 per cent, 20.9 per cent and 11.9 per cent, respectively.