China Focus: Tencent, Alibaba mobile payment spat

Chinese Internet giant Tencent this week cut links between its popular mobile app WeChat and Alibaba's payment service, Alipay, just as users are rushing to use the services in run-up to the Spring Festival, which this year falls on Feb. 19.

Mobile payment is the latest bone of contention between the two giants, who have gone head-to-head over everything from taxi services to banking.

Tencent's hugely popular social media service WeChat, which has 600 million users, on Monday closed the link that allowed Alipay users to send digital "red envelopes", gifts of money traditionally sent during the New Year holiday, to contacts on WeChat.

WeChat's own payment service has struggled to gain ground against Alipay, which has 300 million users and dominates China's third-party payment market.

Alipay had a market share of 83 percent by September 2014, while Tencent only had a 10 percent share.

WeChat may hope that cutting off the Alipay link will push users to use Tencent's own service.

Although Alibaba is the market leader in the online payment sector, sign-ups to its social networking app are lack luster, which is important for the spread of the virtual red envelopes.

Tencent said it canceled links to some third-party platforms to protect users from fake "red envelopes" and fraud, while Alipay said it would continue to provide its service to WeChat and should users find the Alipay service blocked on WeChat, they could continue their transactions through their mobile browsers.

Tencent launched its red envelope service on WeChat on Jan. 26, 2014, several days ahead of last year's Spring Festival.

During the Spring Festival holiday in 2014, more than 8 million users participated in Tencent's campaign, which boosted Tencent's mobile payment service remarkably.

"Although the competition is disguised by 'sound reasoning', we can see that their real intention is to fight for market share," said Guo Tianyong, a professor with the Central University of Finance and Economics.

Guo said that suppressing the competition was not unusual.

The unbridled battle between Tencent and Alibaba, however, has effected end users and merchants on WeChat, where about 60 percent of transactions were conducted through Alipay, according to Ebrun, a Chinese e-commerce consulting firm.

"Alipay is suspended. You can switch to the Tencent payment service or use Alipay at our restaurant," according to a statement posted on "Russian Barbecue," a WeChat online merchant.

Tencent and Alibaba are too busy consolidating their own platforms and carving up the market, this does not reflect the inclusive feature of the Internet, Guo said.

Internet companies should be more cautious and regulators should step in when necessary to protect consumers' rights, he added. Enditem