For Dec 12 shopping festival, Alibaba, Tencent, UnionPay battle for bigger share of offline payment market

By Liang Fei Source:Global Times Published: 2016/12/13 18:43:39

Mobile warfare

Over the weekend, China's Internet giants again went to war for users of their mobile payment tools during the December 12 shopping festival. Alibaba Group Holding and Tencent Holdings, as well as the bank card association China UnionPay, each launched immense promotions for the event. To take advantage of these promotions, which offer large discounts, consumers have to use these companies' mobile payment tools. Alibaba's Alipay remains the market leader in the sector, but experts said the landscape is changing. Tencent's WeChat has been gaining ground in the mobile payments segment. And China UnionPay has been revamping its own mobile payment tools to be more competitive, with its own standards for Quick Response (QR) code payments released on Monday. 

Customers shop at a Carrefour store in Beijing on Monday. Photo: Li Hao/GT

Customers shop at a Carrefour store in Beijing on Monday. Photo: Li Hao/GT

December 12 has become another major shopping day for Chinese consumers.

However, unlike the Singles' Day shopping festival on November 11, during which most of the sales take place online, many of the sales on December 12 happen offline, with mobile payments services playing a major role.

The day has become something of a battlefield for China's Internet giants to promote their mobile payment services.

 Zhu Ling, 57, is one consumer who was drawn to the promotion this year after she saw introductions about the promotion on the Alipay app.

"I just bought some necessities and I got two 50 yuan e-coupons by paying with Alipay," Zhu told the Global Times on Sunday, while smiling with a bag of groceries she bought via Alipay from a Carrefour store in Chaoyang district in Beijing.

Zhu said she downloaded Alibaba Group Holding's Alipay app in December 2015, when the company and Carrefour ran a promotion that gave customers a 50 yuan ($7.23) discount on each purchase of 100 yuan or more. Having tasted such sweet savings, Zhu began to pay close attention to similar events.

This year's broader promotion, which ran from Saturday to Monday, was likely to have drawn more users for Alipay.

It covers some 1 million stores in more than 400 cities around the country. The number of participating stores is three times the number in 2015, Alibaba said in a statement sent to the Global Times on Monday.

Owning offline

Alibaba is not the only company trying to tap China's growing consumerism during the holiday seasons.

On October 9, Tencent launched a promotion, which runs until the end of December, allowing consumers to receive gift money randomly by using its WeChat payment function, according to a statement Tencent sent to the Global Times on Monday.

Since getting into mobile payments, WeChat has become a rival to Alipay, which continues to lead the market.

In the second quarter of 2016, Alipay controlled 55.4 percent of the mobile payment market and Tencent claimed 32.1 percent, according to data that Internet consultancy Analysys International released on November 7.

On Thursday, Tencent announced that it had reached a deal with the Starbucks coffee shop chain, which will accept WeChat payment at nearly 2,500 Starbucks stores on the Chinese mainland.

This deal was considered a major success for Tencent. Despite its immense network of stores, Starbucks has been reluctant to accept third-party mobile payments because it launched its own mobile payment system in July. And it so far still does not accept Alipay.

In a statement sent to the Global Times on Monday, Alipay said it is also in talks with Starbucks for potential cooperation.

Experts noted that WeChat's social networking feature, which has given it an immense and loyal user base, is the reason why it was first to get into Starbucks. "Alipay used to be the absolute dominant mobile payment tool, but now WeChat is eating into its market share because Chinese consumers use the app so frequently," said Liu Dingding, a Beijing-based independent industry analyst.

Despite Alipay's larger market share, the number of its app's active users in the second quarter is less than that of Tencent's payment apps, according to Analysys International's report.

"It is very possible that we'll see WeChat payment surpass Alipay in small offline payments of less than 1,000 yuan," Liu told the Global Times on Sunday.

UnionPay joins the fray

With these massive promotion campaigns, Chinese consumers, especially those in big cities, have formed the habit of using mobile payment technologies like Quick Response (QR) codes, which both Alipay and WeChat use.

A survey by consultancy Deloitte released on December 5 showed that 78 percent of respondents said they had used mobile payment options at least once.

The number of mobile payments users "is nearly equal to that of the mobile Internet," Liu said, adding that China has become the biggest mobile payment market in the world.

Alibaba and Tencent are not the only ones who see the potential of mobile payments. Payment giant China UnionPay is also stepping up its presence - recently launching a promotion campaign for its Quick Pass mobile payment tool. For instance, customers at 7-11 convenience stores can get a discount of as much as 10 yuan on some purchases.

Unlike QR code payments, Quick Pass is based on near-field communication (NFC) technology, which enables consumers to make payments by tapping their smartphones against payment terminals. Apple Pay and Samsung Pay are based on the similar technology.

UnionPay launched Quick Pass in December 2015. But it is no secret that UnionPay also has an eye on QR code payments, which is clearly the more popular mobile payment method in China at present.

"Most of our customers use WeChat or Alipay, and very few use Apple Pay or Samsung Pay," said a cashier at a Carrefour store in Beijing's Chaoyang district on Sunday. He declined to be identified.

This year, UnionPay's big move in the mobile Internet sector has been its development of QR code payments.

On Monday, UnionPay announced its own standards for QR code payment services. Industrial and Commercial Bank of China and China Minsheng Bank, both members of UnionPay, have been conducting trials of QR code payment services based on the UnionPay standards, a spokesman for UnionPay told the Global Times on Monday.

Although no major security flaws have emerged in existing QR code payment services provided by companies such as Alibaba and Tencent, the UnionPay standard is technically more secure, said Dong Zheng, editor-in-chief of the credit card information portal

But the company has to do more to promote the tool "if it wants a foothold in the QR code payment market," Dong told the Global Times on Monday.


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