Founded in November, 1998, Tencent has grown into one of China’s largest Internet service portals. Its platforms include QQ (QQ Instant Messenger), QQ.com, QQ Games, Qzone, 3g.QQ.com, SoSo, PaiPai and Tenpay, and span communication, information, entertainment, e-commerce and others. As of September 30, 2011, it said its active QQ user accounts for QQ IM stood at 711.7 million. Tencent listed in Hong Kong in 2004.
China mobile payments market to expand as Tencent-Alibaba rivalry heats up
Internet giant seeks to challenge Alibaba's lead with the launch of Weixin Payment services
While the mainland's banking industry remains behind those of more developed economies, the country is witnessing a rapid expansion in its online and mobile payment market as competition intensifies in the internet sector.
Shenzhen-based Tencent, the largest internet company in Asia, stepped up the pace last week by offering payment services through its popular mobile messaging application WeChat, known as Weixin on the mainland.
That marked a stinging broadside against the mainland's e-commerce giant Alibaba, which runs the domestic market-leading online and mobile payment platform Alipay.
The stakes are high for Tencent, Alibaba and other domestic providers of payment platforms. Internet consultancy iResearch forecast the gross merchandise value of the mainland's third-party online payments market would reach 18.5 trillion yuan (HK$23.4 trillion) by 2017, up from 5.4 trillion yuan last year.
By 2017, more than half of such transactions were expected to be made on smartphones and media tablets, iResearch said. It projected the gross merchandise value of the mobile payment segment would hit 11.9 trillion yuan in 2017, a huge jump from 1.2 trillion yuan last year.
The rise in mobile payment transactions will likely follow the increase in the number of people who access the internet on their mobile devices. Data from the China Internet Network Information Centre showed there were 618 million internet users on the mainland at the end of December, with about 500 million using smartphones and tablets to go online.
Ricky Lai, a research analyst at Guotai Junan Securities, said: "The mobile internet is expected to maintain robust growth on the mainland because of the proliferation of smartphones, the shift of more 2G subscribers to 3G or 4G services and the wider adoption of popular apps like WeChat."
According to iResearch, Alibaba and Tencent would dominate the mainland's mobile payment market over the next few years.
Last week, Tencent opened WeChat Payment to all verified merchants after several months of testing. "We opened Weixin Payment services to merchants in 21 categories, including apparel, books, restaurants and 3C, for consumer electronics, computers and communications," spokeswoman Chen Limin told the South China Morning Post.
The service, which allows users to pay for goods or services inside the app, was only available on the mainland, with no current plans to launch in other markets, Chen said. WeChat had about 272 million monthly active users worldwide in the third quarter of last year.
Merchants are required to pay upfront a 20,000-yuan security deposit. Tencent will charge a 0.6 per cent commission per transaction.
Tencent declined to say how many merchants would use the service this year. Chen said early adopters included the Guangdong branch of China Unicom, smartphone maker Xiaomi, Pacific Coffee, vending-machine operator Ubox, China Southern Airlines and hotpot restaurant chain Haidilao.
Alicia Yap, the head of China internet research at Barclays, expected Tencent to convince many traditional merchants to set up accounts on WeChat and benefit from the social media link to customers. "Tencent is likely to attract a large number of users on WeChat payment for their day-to-day activities," Yap said.
Catching up with Alibaba's online payment lead will be a challenge for Tencent. Alipay Wallet, the mobile payment app of Alipay, supports more than 100 million merchants, including those without online stores.
Alipay's online service supports more than 800 million registered users and processes 105.8 million transactions daily, worth about 18.4 billion yuan.