Alipay, WeChat Wallet focus on brick-and-mortar stores

By Zhang Ye Source:Global Times Published: 2015-12-13 19:43:01

The battle between WeChat Wallet and Alipay has spilled off-line as the two Chinese online payment services seek to extend their influence into the physical world. Making their services available at additional brick-and-mortar stores will draw more consumers to their respective online platforms. As Alipay and WeChat Wallet fight for the market share, they face further competitions from China's payment monopoly UnionPay, as well as US tech giant Apple.

Alipay and WeChat Wallet each offers their users discounts for the "Double 12" shopping festival on Saturday in an effort to secure a greater share of the electronic payment market. Photo: CFP

Shoppers from around the country bought more than 207,500 packages of toilet paper with a quick scan of their smartphones on Saturday.

"Since this morning, I've seen flocks of people paying with Alipay Wallet," said a Carrefour employee in Beijing, who asked to remain anonymous, referring to the mobile payment app developed by e-commerce giant Alibaba Group Holding.

The store was so crowded, mostly with young people, that it was hard to even find a shopping cart, the employee told the Global Times on Saturday evening. Some customers even lined up outside before the store opened that morning.

That same scene played out at more than 300,000 stores in China, including big names such as US retailer Wal-Mart, Japan's 7-Eleven and China's CR Vanguard.

One big reason for the excitement was the 50 yuan ($7.7) discount that Alipay was offering on purchases of more than 100 yuan through its service.

Shen Yunfang, a public relation (PR) manager at Alipay, told the Global Times Wednesday that Alipay, brick-and-mortar stores and's mobile site for local food and beverage services, have spent a combined 1 billion yuan on subsidies to support the day's shopping binge.

Data from Alipay issued on Sunday showed that a total of 28 million consumers in the country, aging from 4 to 92 years old, participated the event.

It wasn't the first time Alibaba rolled a discount program to boost its user base.

Unlike last year's promotion, in which more than 20,000 businesses and retailers joined in Alibaba's hefty sales, this year's event attracted a lot more stores in more places, including airports and gas stations, highlighting Alibaba's ambition to extend its electronic payment service off-line.

Off-line expansion

Alibaba first got Alipay accepted at a physical store in 2012.

The payment service is now available at than 500,000 stores, supermarkets, cafes, bars, bakeries and restaurants, according to Alibaba.

Alipay boasts that it takes just two seconds to pay with its service.

Shen said that Alipay is also rapidly becoming available at hospitals, subways and vending machines, as well as stores overseas.

Alibaba's rival Tencent Holdings, which makes the popular instan messaging app WeChat, has also found a toehold in the electronic payment business with WeChat Wallet.

Tencent is pushing its off-line business as well.

On Saturday, WeChat held a promotion that enabled users to get coupons with up to 188 yuan in cash when shopping at more than 100,000 stores partnered with Tencent.

The promotion followed an offer of a maximum deduction of 300 yuan for off-line shoppers who paid with the app during this year's Singles' Day mega sale on November 11.

Since May, Carrefour and Walmart stores in China have been adopting WeChat wallet as a payment path. The service also started to become available at major Chinese airports in March.

WeChat Wallet, as a late comer, can now be used at more than 200,000 stores in China. A PR representative from WeChat told the Global Times on Thursday that its payment service is also accepted at schools, hospitals, restaurants and gas stations.

Turf war

Analysts attributed electronic payment apps' active expansions offl-line to their desire for a greater market share.

Brick-and-mortar stores hold a lot more potential than online business, said Liu Dingding, an analyst with Beijing-based consultancy Sootoo.

"It's turf that electronic payment apps can't ignore," Liu told the Global Times on Thursday.

Online purchases account for just a fraction of total retail sales in China.

In the first 10 months of 2015, consumers spent 2.4 trillion yuan online, or 10 percent of total retail sales, official data showed.

Businesses such as retail and catering are important areas for cultivating users' electronic payment habits, said the WeChat PR representative.

Thanks to its active expansion into physical stores and its previous hongbao-grabbing promotions during the Chinese Lunar New Year, users of WeChat Wallet grew 59.91 percent quarter-on-quarter to 152.7 million by the third quarter of 2015.

Alipay remains the leader in mobile payments in China, but its share of the market fell from 74.31 percent to 71.51 percent in the third quarter, according a report issued by consultancy Analysys International on November 27.

Liu said WeChat, which is used by most Chinese, will be a big threat to Alipay, if it succeeds to converting users to its mobile payment service.

WeChat said its active monthly users hit 650 million in September and more than 200 million users of Tencent's WeChat and QQ linked bank accounts to their app accounts.

Liu said there wasn't much of a chance that WeChat will be able to kill off Alipay, or vice versa.

"The two will likely become co-leaders in China's electronic payment market," he said.

Many users have accounts with both services. Beijing resident Zhang Xuan uses WeChat Wallet and Alipay for different things.

"I think each has its own advantages," she said.

 "It's more convenient to transfer small amounts to my friends through WeChat. But I would use Alipay for large purchases out of security concerns," she added, noting that Alipay is more trustworthy because of its earlier entry into the sector.

Looming competition

Alipay and WeChat are not the only players in China's mobile payment game.

Mobile payment transactions in China rose to 4.4 trillion yuan in the third quarter of 2015, up 115 percent year-on-year, according to Analysys.

China's only interbank network UnionPay, which monopolizes the country's debit and credit card processing, has also started carving out its own off-line territory for mobile payments. In partnership with more than 20 commercial banks, it launched its electronic payment service Quick Pass on Saturday.

Users of NFC-enabled smartphones can buy goods by swiping their phones on UnionPay's POS (point of sale) terminals, enjoying shorter payment time compared with previous bank cards.

Meanwhile, US tech giant Apple Inc also reportedly has a plan to introduce its electronic payment service Apple Pay on the Chinese mainland in February, 2016.

The iPhone maker has reached deals with China's four big State-owned banks to roll out its payment service, the Wall Street Journal reported in late November.

In addition to the potential competitors, Alipay and WeChat also face with regulatory hurdles, Liu said.

"Chinese authorities support innovative payment services, but they are also facing lobbying pressure from traditional off-line payment services."

Newspaper headline: Off-line payment push

Posted in: Insight

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