Alipay Blocked on Tencent’s WeChat Amid Mobile Payment Fight
The world of mobile payments has brought in a great many competitors from all over, each eager to lay claim to a piece of the market, and potentially, get hands on other slices of the market from competing firms.
Sometimes, the struggle for dominance in a sector expresses itself in unexpected ways, and we’re seeing one of these in action now as Tencent and Alibaba duke it out, and as Tencent lands an unexpected blow on Alibaba.
According to the reports, what happened was that—with the Spring Festival only about a week and a half out, landing this year on February 19—Tencent cut links with Alibaba, essentially forcing Alipay off the WeChat service. This means, in turn, that Alipay no longer has access to the approximately 600 million WeChat users that make up the service, which may well mean a lot of lost business for the company.
With this closure, users will no longer have access to the digital “red envelope” option, which allowed users to send gifts of money back and forth, a standard event for the Chinese New Year celebrations. When asked why this was being done, reports suggest that Tencent noted that it already canceled some links in a bid to protect virtual red envelope users from running afoul of fraud.
But when considering the numbers, it turns out that Tencent evicting Alibaba, so to speak, might have been a matter of necessity for Tencent. Tencent’s mobile payments service had a 10 percent share of the total mobile payments market in China, while Alipay boasted fully 83 percent. With Tencent cutting Alipay off the WeChat systems, that may give Tencent the chance it needs to hawk its own service sufficiently in the direction of its own WeChat user base.
That’s where things actually get even more interesting than they were already. Alibaba all but owns the mobile payment market, but its social networking app isn’t seeing near so much use.
Meanwhile, Tencent has much the same problem but completely in reverse; its social network is used by a huge chunk of the country and several users beyond, but its mobile payment system is much more lackluster.
The reasonable thing to do here, it would see, would be for Alipay and WeChat to work together, and for Tencent to ditch its mobile payment system in much the same way that Alibaba should drop its social networking, allowing both companies to focus on clear strengths while still making a fortune in their respective areas. But given that Alipay users don’t really need WeChat to use the service—even a mobile browser is sufficient—it’s enough to make you wonder just what Tencent really has in mind here.
Has Tencent just cut off its nose to spite its face? Or does Tencent have something better up its sleeve? Only time will tell just what result comes out, but one thing is clear: the mobile payment market is one that’s constantly in flux, and as companies jockey for position, the consumer is likely to be the ultimate winner.