The launch of WeChat payment last December turned Alibaba and its Alipayment red. Since the new payment innovation of Tencent was a key element to O2O, Alipay didn’t have any choice but to make a move and raise its voice. It certainly shows that WeChat payment could be a threat on this segment.


WeChat launched the final step to loop Online to Offline but… How does it work ?

Well, it is quiet easy. About 10,000 vending machines, supporting WeChat QR code, are located in the main cities of the country, Beijing, Shanghai, Guangzhou, Shenzhen and other places. Once you scanned the QR code of the product you want to buy, your phone will automatically redirect to the WeChat payment page and then to your bank card payment page. You can also enter your bank information and set a password. Next step ? You have your product popping out of the machine ! In the meanwhile, you actually discreetly register on WeChat payment thanks to their TenPay license and this, without disturbing your Alipay account.


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So why customer aren’t buying already ?

It isn’t the fact of registering for a new account that dissuade people to do it, it is more about the fact that there aren’t enough temptation. WeChat already has a massive base of users, now it has to find partnership with stores to diversify the payment way. So if they find more business interested to work with them, they will become a strong competitive opponent to Alipay. For exemple the idea of paying the subscription of the newspapers Reference News per their WeChat account is brilliant. Also, when users want to find a restaurant near by them, then can also pay the coupon through WeChat payment. Nevertheless, clients are already overwhelmed by all the payment way that already exist, public account such as phone application.


The impact of WeChat payment in the Online to Offline market

If WeChat payment get the attention it deserves, the online and offline market should bring an incredible power to Tencent and might be able to compete with the Ali Empire. Indeed, lately, the firm has been craving to promote more its own way of payment : Alipay wallet. This system is already established on YinTai (a Chinese online shopping mall) and compared to WeChat payment, is already powerful and efficient. The 7.6 version was launched by the end of last October and promoting the public service platform where already a large number of banks, shops, telecom operators… joined the Ali wallet system.

However, there are still questions without a clear answer. With the competition, Alipay wallet wanted to secure their partner by reassure and certify them that none fees concerning their services platform. This is a reply to WeChat’s news saying that they would charge an 300 yuan annual fee for their services. Even if they confirmed it was the third party that would have to pay this additionnal fee when the service account operators apply for WeChat authentication, it has nothing to do about users or subscribers.


How does this fight is going to end ?

WeChat has only been launched in 2011 but already reach the 600 millions users including more than half of them based in China. 8,000 accounts are creating everyday and it is more than a billion information that are exchanged per day. Upon those 600 million accounts, 2 million are publics and could benefits from this innovation.

On the other hand, Alipay feeling threaten by this clever move, annonced that Yu’E Bao (used in Alipay wallet) benefits from an annualized 7-days return from 4.8% to 5.2% which was a way to win the loyalty of the users. WeChat installed a smart new system but might miss time compared to his huge competitor Alipay. Nevertheless, with the base users of Tenpay, Alipay has some serious reason to worry.

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