Walmart parts ways with Alipay in western China

Updated 2018-03-29 11:11:04

Walmart parts ways with Alipay, joins hands with WeChat in western China amid bitter battle for 'new retail' data

The payment battle between China's payment tools Alipay and WeChat Pay has been rekindled recently since Walmart took the move to ditch Alipay.

U.S. retail giant Walmart Inc said from March 15, it dropped Alipay in all of its stores in the western region of China and agreed to a tie-up with Tencent Holdings to use its popular WeChat Pay app.

Alipay is the third-party payment tool of Ant Financial, an affiliate of Alibaba Group Holding.

"[It] was a purely business decision aimed at improving customers' experience when shopping in our stores," Walmart China said.

Ant Financial declined to comment on the issue when reached by the Global Times.

Zhang Jun, Tencent's public relations director, said on his Weibo account on Monday that in the communication between third-party payment platforms and merchants, basically the latter has the initiative to make a choice.

"Any third-party payment tool has no ability or possibility to interfere with a merchant's decision," he noted.

Another brick-and-mortar retailer in China, chain store operator Better Life, also known as Bubugao, was also reported to be in a standoff with Alipay although it had not banned the payment tool officially.

A representative of Better Life, based in Central China's Hunan Province, told the Global Times Wednesday that Alipay is still available in a few stores. "The reason why it is not connected in a large scale is that its way of cooperation is too aggressive - it only accepts being the first level of entrance and the data can only flow to Alipay, not the other way around [to the digital wallet that belongs to us]," he said.

"Given the broad and profitable offline market, the payment battle has entered the next level - from bringing functions such as payments to the awareness of consumers in the brick-and-mortar stores to the fight for stores' market share," said Wang Pengbo, a finance industry analyst at Analysys.

Wang said that online retail only accounted for 15 percent of the country's retail sales last year, meaning there is much more potential to be tapped in physical stores.

"For online payments, the competition pattern has been almost fixed and online merchants have already selected a preferred payment partner. For example, on taobao.com and Tmall.com, you cannot find WeChat Pay; likewise, you can't find Alipay on JD.com," Wang explained.

Walmart holds a 12.1 percent stake in China's second-largest e-commerce company JD.com Inc (JD), whose majority shareholder is Tencent.

On February 23 this year, Better Life announced it would transfer stakes of 6 percent and 5 percent each to Tencent and JD, as part of a move to the "new retail" sector and as part of a move to join Tencent's new retail layout.

It is hard to neglect the power of capital and equity that either of the two giants have in physical stores when it comes to take a side, and it is just natural that such factors have an influence, said Mu Chu, an analyst from mpaypass.com.cn, a Shenzhen-based mobile payment intelligence provider.

In the third quarter of 2017, Alipay's share in the domestic third-party payment rose to 53.73 percent, up 14.7 percentage points compared with the second quarter. Financial services under Tencent had 39.35 percent, read a report by research firm Analysys.

On Sunday, Tencent CEO Pony Ma Huateng said at a forum in Shenzhen, South China's Guangdong Province that he hoped WeChat users can be connected to more and more physical services.

"The domestic third-party payment industry is very profitable," said Li Yi, a research fellow at the Shanghai Academy of Social Sciences.

"It's not just the transaction fees the providers charge, it's the business value of the data they collect that can be used to sell financial services and target ads," Li said.

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