Banks set to lose out in online fight

By MENG JING (China Daily) Updated: 2015-02-26 05:18

By investing billions of yuan to encourage people to send red envelopes online, Internet firms such as Alipay, WeChat and Weibo Corp have enabled users to link their debit cards with online payment accounts — viewed widely as being the most difficult factor in luring mobile payment users.

Qian Haili, an Internet finance analyst at the China E-Commerce Research Center, said the red envelopes battle launched by Internet firms successfully educated the mobile payments market in China during Spring Festival.

"WeChat, a social app used by friends, relatives and colleagues, had a slight edge in the competition, but ultimately no one loses the battle except the banks," she said.

Qian said the red envelope feature enabled Alipay to increase user loyalty during Spring Festival and also helped WeChat to gain new mobile users.

"With more people becoming aware of the convenience of mobile payments and more offline merchants allowing them to pay through mobile devices in the future, the banks' market will be reduced," she said.

According to the People's Bank of China, the central bank, mobile payments have grown strongly, with turnover rising by 134 percent year-on-year to 22.59 trillion yuan ($3.61 trillion) last year.

Despite the potential threat to banks, Wang from iResearch said the impact might not be that big, as consumer banking only accounts for a small part of banks' business.

The online phenomenon during Spring Festival also affected the three Chinese telecom giants' short-messaging business.

Sending short messages to wish friends "Happy New Year" used to be a traditional activity during Spring Festival.

However, Xinhua News Agency said China Telecom's short-messaging business fell by 31.97 percent year-on-year on Lunar New Year's Eve, the Spring Festival peak, with people busy sending and receiving red envelopes online instead.

mengjing@chinadaily.com.cn