AliPay and Tencent Hop Aboard Chinese Public Transit

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Following fierce competition in the convenience store, supermarket, taxi and ride-sharing sectors, China’s leading online and mobile payment providers are vying for a slice of the country’s public transit market.

AliPay, China UnionPay and Tencent have all entered cooperative agreements with municipal transit authorities to bring mobile payments to passengers on local bus, metro and train systems.

Chinese Internet giant Tencent has just announced the execution of a strategic cooperative agreement with the Guangzhou municipal transit commission, involving the development of transit payment, passenger service and government administrative service operations that build upon the foundation of public transit payment trials at Guangzhou’s Bus Rapid Transit station and Nansha District.

Earlier this month Tencent also entered agreements with the municipal public transit authorities of the Anhui-province capital of Hefei and the southern manufacturing hub of Shenzhen for the deployment its QR code passenger app “Tencent Passenger Ride Code” (腾讯乘车码).

The scheme allows passengers to use Tencent’s WeChat app to pay for ticket fees by scanning their mobile devices when they board public transit.

Zheng Haojian, Tencent Vice president, said that the scheme marked the starting point of a smart public transit system for the city of Shenzhen that would encompass the entire municipality.

According to Zheng the system would “use online technology to re-fashion Shenzhen’s urban public transit ecosystem…covering public transit financial payments, cloud smart deployment and cloud-assisted driving, as well as incorporating multiple cutting-edge technologies including the Internet of Things, big data and artificial intelligence.”

Tencent has already deployed its new mobile payments scheme with the public transit systems of a total of five cities, including Foshan, Guangzhou, Hefei, Qingdao and Zhumadian.

At the same time that Tencent announced its cooperative agreement with Guangzhou, China UnionPay formally launched the use of its Cloud Flash Pay scheme with the public transit system of Jiashan county in the Zhejiang city of Jiaxing, which is scheduled to cover the entire county by the end of the year.

Public transit passengers in Jiashan will be able to use Cloud Flash Pay to pay for bus fees, using a UnionPay IC card, smart wearable devices or their mobile phones.

UnionPay’s Cloud Flash Pay has established a strong presence in the Zhejiang province public transit sector, establishing cooperative arrangements with over 20 counties and municipalities including the Hangzhou, Wenzhou and Leqing.

Earlier this month in the north of China near Beijing, Jack Ma’s AliPay teamed up with with the Tianjin Bus Group to launch a smart bus scheme involving the installation of scanning equipment in vehicles across the whole of Tianjin municipality.

Since the start of the year AliPay and UnionPay have aggressive sought to expand the use of their mobile payment services with Chinese public transit systems. AliPay has entered arrangements with the bus and train systems of over a dozen cities around China, while just under ten Chinese urban centres make use of Cloud Flash Pay with local public transit.

AliPay and Tenpay currently dominate the Chinese mobile payments sector, jointly accounting for over 90% of market share.

A study by the iResearch Consulting Group indicates that as of the first quarter of this year AliPay held a 54% marketshare, while Tenpay accounted for over 40%.

UnionPay’s line of mobile payment products, which includes QR code payments and NFC payment using Cloud Flash Pay, enjoys a market share of around 10%.

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