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.” Meituan faces customer lawsuit for alleged abuse of market power Besides Meituan, TikTok owner ByteDance and China’s third-largest e-commerce company Pinduoduo have all made plans to introduce payment services. ByteDance, which formed an online sales department in June, obtained a domestic online payment licence through an acquisition. Pinduoduo unveiled its Duoduo Wallet payment app this month and said in a notice to users that it would soon offer discounts to shoppers who use it to pay for items bought on the company’s website. Meituan and ride-hailing giant Didi have gone further, rolling out microloan services. Didi has accelerated efforts in payments in recent months after its December 2017 acquisition of 19 Pay, with user numbers reaching about 30 million as of this month, according to Chinese media Jiemian , citing unnamed sources. However, that is still tiny compared with 711 million monthly active users for Alibaba’s Alipay payment app. Third-party payment licences have become a rare commodity in China since the central bank stopped issuing new ones indefinitely in 2016, forcing the latecomers to acquire one through acquisition. In the case of Ant Group, its move from payments into fintech areas such as microloans appears to have drawn the attention of authorities. In a statement issued on Sunday, People’s Bank of China deputy governor Pan Gongsheng said Ant must return to its origins in online payments and prohibit “irregular competition” and protect customers’ privacy when operating its personal credit rating business. Digital yuan will not compete with WeChat Pay or Alipay The dominance of the two big Chinese payment platforms did not happen overnight. Rather, payments and financial services have over time become a significant part of the revenue of Alibaba and Tencent. Internet finance accounted for 8.5 per cent of China’s internet economy in 2013, growing to an estimated 26.7 per cent for 2020, according to China Internet Watch. While Alipay had first-mover advantage, WeChat Pay was able to break into the market on the back of Tencent’s ubiquitous messaging app. WeChat’s virtual red envelopes function , which was launched in 2014, also helped Tencent gain share in payments. Wang Pengbo, an independent financial analyst, said second-tier tech giants are keen to get into this market because “payment is the fundamental part that links commerce and finance together”. “Only when a user links their bank card to your app can they use the financial product conveniently. You can never ignore such convenience,” he said. When a company builds up expertise in a certain field it is only natural for it to explore related payment services, Wang added. In the case of ByteDance, the challenge is to monetise its huge web traffic, not only through advertising but also through e-commerce and payment. “The advantage of ByteDance is its traffic and a huge user base … so it can basically replicate the advantage of WeChat,” he said. Zhao at Lingnan University said one of the motivations for companies to develop their own payment platform is to acquire user data, which can then be used to build risk control models and develop a microloan business. In the case of Meituan, if users are paying for food deliveries with Alipay then “the core [transaction] data still goes to Alipay”, he said. However, Zhao said new entrants would need to offer extra benefits to entice users to sign up for alternative payment methods because many people already link their bank cards to Alipay or WeChat Pay and would be reluctant to share banking information among multiple financial products. In the case of ByteDance, one challenge will be to increase trust on its Douyin platform before users will be comfortable providing financial details. “For WeChat, we are using it to interact with friends and relatives and sometimes we may need to transfer money to them. It’s very natural and we won’t be very vigilant about it,” said Zhao. “But for platforms like Douyin, we are mostly interacting with people whose real name we don’t even know.” Analysts say Beijing’s antitrust crackdown will eventually impact Chinese tech companies other than Alibaba, which saw a massive sell off in its New York and Hong Kong-listed shares after the probe was announced. That in turn spooked investors who sold Tencent and Meituan too, but all three stocks rebounded after Tuesday. “Antitrust regulation is targeting the whole industry,” said Xie Yongjiang, an associate professor at Beijing University of Posts and Telecommunication. “The first batch might be companies already practising monopolistic behaviour [but] that will send a warning to others about stifling competition.” Currently, customers cannot pay via WeChat Pay on Alibaba’s e-commerce platforms Taobao and Tmall. Similarly, WeChat users cannot use Alipay to pay for products and services in the superapp. Meituan’s app, which currently offers discounts of around 5 yuan for customers using its own payment service, supports both WeChat Pay and Alipay but users must tap on the options menu to see Alipay. “In a fair market, consumers should be able to choose other methods of payment. When that happens, it will be a good opportunity for late comers,” said John Dong, a lawyer at Shanghai-based Joint-Win Partners. That is likely to prove too tempting for the ByteDances, Meituans and Didis of China’s internet scene. “Even if they think they won’t win the game, everyone will jump in head first as long as they see there is some chance,” said Zhao.