Alipay said in a statement that it would offer investors an annualized return of 7 per cent, while their principal also will be guaranteed. The product will have a maturity of one year. Prior to its launch on 14 February 2013, more than 1.4 million users had made reservations for the new investment product, the firm added.

China's financial sector has long been dominated by state-owned banks, but technology companies like Alibaba, Tencent and Baidu, have provided stiff competition by using online platforms to push innovations in the sector. For instance, the Yu'e Bao fund, which allows investors to withdraw money instantly, was launched in June 2013 and had attracted more than 49 million customers with more than $40 billion in investment as of 15 January 2014. (Read more on that product, here.)

Alipay's wealth management app will invest in a universal insurance product offered by Pearl River Life Insurance, an insurer based in China's southern Guangzhou city. The product is expected to pool 300 million yuan ($49.5 million), which will be invested in bank deposits, equities, funds and the property sector.

The minimum investment is 1,000 yuan a person and each investor's maximum contribution is capped at two million yuan, the statement added.