By Li Hongmei

Yu'ebao, the investment service introduced by payment service Alipay, seems to have risen into the firmament after garnering 49 million users and helping build China's largest investment fund in just six months, China Business News reports.

But the popularity built on Yu'ebao's convenience, including allowing users to make money by investing the value stored in their Alipay accounts and the high returns it claims, do not instill confidence about the security of the service, the paper said.

There have been reports of Yu'ebao users becoming victims of identity theft and Alipay not compensating them in a timely manner as advertised in its marketing campaign, and another about a former Alipay employee selling user information, the paper noted.

Desheng Fund Center chief analyst Jiang Saichun also told the paper that the high returns on such investments - currently at a seven-day average of a 6% annualized rate - is not the norm, since the normal return for such products is around 4%-5%.

Moreover, investors may actually enjoy higher returns if they invest their money in long-term products instead of the short-term ones offered by Yu'ebao, the paper said.

The report said Alipay recently introduced a limit on the amount of money that users could transfer from Yu'ebao or use to pay for online purchases, capping the amount for a single transaction and for a single a day at 50,000 yuan (US$8,250) and at 200,000 yuan (US$33,000) for a month.

Such a measure can prevent the 250 billion-yuan (US$41.3 billion) currency fund linked to Yu'ebao from experiencing a situation similar to a run on a bank when negative news leads to investors pulling out, but Jiang said the risks surrounding such products are more likely to be institutional.

The paper noted that Yu'ebao has recently weathered a similar situation, as several funds in China were forced to stop offering clients same-day redemption during the liquidity strain late last year.