ALIPAY, the online payment arm under Alibaba Group, said today it will invest 500 million yuan (US$79.4 million) in the next three years to boost cash-on-delivery services to e-commerce merchants.

It is the latest move of China's largest third party payment firm to move offline and appeal to a wider group of users.

In the first quarter this year, Alipay will provide thousands of POS terminals to more than 60 regional courier companies.

Other investments will include technology system upgrades and marketing expenses.

These portable point-of-sales machines will allow goods and payment to be received simultaneously, enabling merchants to receive payments quicker and save delivery firms extra work to update the status of orders.

Online vendors will be able to receive their payments after 24 hours of delivery, speeding up their capital flow.

Delivery companies need to pay a one-off rent of 500 yuan to use Alipay's service as well as commission fees on each transaction they handle.

One of the leading online vendors, Dangdang has started adopting the cash-on-delivery service.

Alipay plans to have 10,000 of these devices in the first half of 2012 in all first-tier cities including Shanghai, Beijing and Guangzhou. Second tier cities will see these services by the end of 2012.