Huawei renews effort in mobile payments amid Beijing’s moves to boost industry competition

Beset by US sanctions, Huawei has started to ramp up its mobile payments service after gaining a nationwide licence from a corporate acquisition in March
Its Huawei Pay app has an opportunity to become competitive against industry giants Alipay and WeChat Pay, according to analysts

Huawei

Josh Ye

Published: 6:47pm, 6 Oct, 2021

Why you can trust SCMP

Chinese telecommunications giant Huawei Technologies Co, beset by US trade sanctions that have weakened its core smartphone business, has started to ramp up operations of its mobile payments service after acquiring a nationwide licence.

This development enhances Huawei’s position, according to analysts, to become one of the major third-party digital payments providers in China, the world’s biggest smartphone and internet market.

The Shenzhen-based company has offered participants to its developer conference later this month the option to pay for their tickets via the new Huawei Zhifu function under its Huawei Pay app. Those who use the service are entitled to a 50 yuan (US$7.75) discount.

That followed the company’s acquisition of a nationwide mobile payments licence from its purchase of Shenzhen Xunlian Zhifu Network in March, according to a report by China Securities Journal. Since 2016, the business development of mobile wallet app Huawei Pay mainly relied on the mobile payments service of state-owned UnionPay, the country’s top bank card clearing service.

“The future mobile payments market [in China] could become a three-way race between Alipay, WeChat Pay and Huawei Pay, which would break the current duopoly,” said Guo Tao, deputy director of China International Electronic Commerce Centre, an agency under the Ministry of Commerce, in a recent post on microblogging site Weibo.

02:40

How mobile payments impact people’s lives in China

“By relying on Huawei’s enormous ecosystem, Huawei Pay can quickly boost its scale and market share, making it the biggest competitor to Alipay and WeChat Pay,” Guo said.

Huawei, which has not made any official announcement about its Huawei Zhifu feature, declined to comment.

China’s mobile payments market is currently dominated by Alipay and WeChat Pay, with a combined 90 per cent market share. Alipay is run by financial technology giant Ant Group, while WeChat Pay is under super app WeChat operator Tencent Holdings. Ant Group is an affiliate of Alibaba Group Holding, owner of the South China Morning Post.

Huawei’s renewed effort in digital financial services comes at an opportune time when Big Tech internet platforms are rushing to comply with Beijing’s mandate to make their “walled gardens” accessible to competition.

Alipay and WeChat Pay are already further opening up their ecosystems to UnionPay’s Cloud QuickPass mobile payments app.

Huawei, other Chinese tech giants are driving a quiet revolution in Africa’s fintech

Privately held Huawei, the world’s largest telecoms equipment maker and formerly China’s biggest smartphone vendor, was added to Washington’s trade blacklist in 2019. It has scrambled to adapt its operations to tighter restrictions imposed last year, covering access to chips developed or produced using US technology, from anywhere.

Since late last year, Huawei has made tactical moves to build up its other businesses, while working to stay relevant in the smartphone industry.

Those initiatives include expanding its cloud services operations in the Asia-Pacific region, helping domestic enterprises cut their carbon footprint, supplying more 5G base stations and core network gear to China’s major telecoms operators, increasing patent licensing deals, establishing partnerships for its HarmonyOS mobile platform and selling its Honor budget smartphone unit.

Still, Huawei has been giving mixed signals about further developing its mobile payments business. Cao Cong, president of Huawei’s global financial services business department, was non-committal in April about the company’s digital payment plans.

“Huawei, as an ecosystem-level tech company, has already done semiconductors, operating systems, hardware and various services,” said Ding Daoshi, director of research at Beijing-based internet consultancy Sootoo. “Expanding into payments is expected. In fact, it is late to the party.”

This article appeared in the South China Morning Post print edition as: Huawei in push for mobile payments

Post