Chinese internet giant Tencent Holdings is working to integrate its QR code system for mobile payments with state-owned China UnionPay, giving the latter a bigger slice of the hotly-contested industry.
With the common QR code system, merchants could provide users of WeChat Pay – the mobile payment service within Tencent’s ubiquitous messaging and social media app WeChat – and UnionPay’s Quickpass with the same code to make payments, Chinese media Caixin reported on Tuesday, citing people familiar with the matter. Currently, merchants have to offer different codes for each payment service.
A Tencent spokesman confirmed the Caixin report and said that the company’s fintech arm, Tenpay, is collaborating with UnionPay on relevant services on a trial basis. UnionPay did not immediately respond to a request for comment.
The unified QR code system has started testing on Android devices in eastern China’s Fuzhou city, Caixin reported, adding that Tencent and UnionPay have also agreed to work together on facial recognition-based payments.
The tie-up would open up a space for UnionPay as a third major player in China’s hotly-contested payments market, currently dominated by a duopoly of WeChat Pay and AliPay by Ant Financial. WeChat Pay and AliPay jointly accounted for over 90% of China’s mobile payments in 2018, data from China Internet Watch showed.
AliPay is not involved in similar negotiations with UnionPay, according to Caixin. Ant Financial, affiliate to the Post’s parent company Alibaba, declined to comment for this story.
The integration between Tencent and UnionPay’s QR code payment systems is a step forward in the central bank’s plan for the industry. In a three-year plan for fintech development issued last August, the People’s Bank of China listed a unified code-scan standard as one of the major tasks for the industry from 2019 to 2021. An integrated barcode system should be available across different payment apps and merchants by 2021, according to the plan.
Over 40% of China’s population – or 583 million users – are paying for goods and services with their smartphones, according to the China Internet Report 2019, co-authored by the Post, its sister news site Abacus and venture capitalist Edith Yeung.
On the mainland, WeChat Pay boasts a penetration rate of 89.2% in the mobile payment market thanks to WeChat, which has over 1 billion users, ahead of Alipay’s 69.5%, according to market research firm Ipsos. The two apps are almost equal in terms of transaction amounts, with WeChat Pay accounting for 45% of the total value of transactions and Alipay for 46%, according to Ipsos data.
This article first appeared on the South China Morning Post.