ByteDance, Meituan and Pinduoduo: China’s second tier tech giants poised to challenge payments duopoly

ByteDance, Meituan, Pinduoduo and Didi might be household names for Chinese netizens but there is one internet business where they are considered nobodies: online payments.

That could soon change as these second-tier giants jostle to launch their own payment services in a challenge to the dominance of Alibaba Group Holding (which owns the Post) and Tencent Holdings amid Beijing’s crackdown on monopoly practices in the digital economy.

While the central government has not gone after third-party payment services – the recently launched probe into Alibaba is for suspected monopolistic conduct in e-commerce – the payments sector is a clear duopoly with Alibaba affiliate Ant Group’s Alipay and Tencent’s WeChat Pay accounting for more than 90 per cent of the market.

However, analysts said the antitrust campaign may provide an opening for other Big Tech firms who have eyed the market but were wary of going up against the two entrenched players. Tencent-backed on-demand services company Meituan, for instance, temporarily banned its customers from using Alipay in July, prompting a lawsuit from one customer over alleged misuse of market power.

“There are early signs of a second payment service war as companies like Meituan, [ByteDance‘s] Douyin and Didi [speed up their entry into the market],” said Zhao Xiaofeng, an assistant professor at Lingnan University’s department of finance and insurance. “They are taking advantage of the political timing … including antitrust regulation which has been significantly strengthened this year.”

Besides Meituan, TikTok owner ByteDance and China’s third-largest e-commerce company Pinduoduo have all made plans to introduce payment services.