Chinese e-commerce giant Alibaba made a decision to hike its merchant fees starting in September. The news caused the company’s U.S. traded stock to surge 3.63% on Monday.
According to a report by Bloomberg, Alibaba informed its vendors on Friday that a basic software service fee of 0.6% on confirmed transactions will be put in place across its Taobao and Tmall platforms. Currently, vendors are charged a fixed annual fee.
Alibaba has been struggling to recover from the consequences of the pandemic while also seeing its sales in China take a significant slump in recent years. Considering that merchant fees are the biggest revenue source for Alibaba, analysts expect that the decision will have a positive effect on the company’s business.
“We view the 0.6% software service fees starting in September as positive to core merchant revenue considering the new arrangement applies to both Taobao and Tmall,” analysts from Jefferies Financial Group wrote in their research note published over the weekend.
Alibaba’s shares traded at the New York Stock Exchange (NYSE) closed at $76.55 per share on Friday before jumping to $79.33 at one point on Monday. The company’s stock is currently 6.11% up year-to-date.
Additionally, Alibaba’s Hong Kong stock also surged to close 4.7% compared to Monday’s opening price.