Technology giants in flap over gift envelopes

Logos of social media, online payment and Internet companies at an Internet conference in Beijing. Alibaba Group Holding Ltd and Tencent Holdings Ltd are competing for a bigger share of the red envelope market during the upcoming Spring Festival. [Photo provided to China Daily]

In the old days, children had to kneel down to receive their cash-filled red envelopes from elder family members during the Chinese Lunar New Year.

But today, receiving or sending a money gift is just a tap away after the launch of virtual red envelope services by Internet giants.

Spring Festival is still a fortnight away but Alibaba Group Holding Ltd and Tencent Holdings Ltd have declared war in their efforts to capture a share of the new market, which essentially boils down to taking payments over the Internet, increasingly on mobile devices.

WeChat, the country's most-widely used mobile messaging app owned by the Shenzhen-based Tencent, fired the first salvo on Monday night by blocking red envelopes sent from Alipay Wallet, the mobile payment service owned by e-commerce giant Alibaba.

Alipay Wallet had just updated its service to allow users to share red envelopes on multiple channels, including Tencent's mobile chatting apps WeChat and QQ.

Tencent did not give any official reason why it had blocked the Wallet service with its WeChat Web page simply citing "security concerns" for rejecting requests to share Alipay's red envelopes on its platform.

Alipay, meanwhile, confirmed on Tuesday that its access to WeChat had been blocked but insisted in a statement that originally it had no plans to share its red envelopes via WeChat.

"We only offered the 'share to WeChat' function after receiving requests from some users," said the statement.

The red envelope feature was first launched by WeChat for last year's Spring Festival and it subsequently went viral. By linking a debit card, WeChat users can send cash-filled virtual red envelopes to friends and family members online.

Users can send fixed amounts or to spice things up, a fixed amount can be divided randomly to a group of recipients.

"The red envelope feature is a very effective way of encouraging people to bind their debit or credit cards to apps, given the popularity now for mobile payment users," said Li Ye, an analyst with the Beijing-based Internet consultancy Analysys International, adding that it is only sensible business for WeChat to have blocked access from Alipay Wallet.

"The red envelope service is the latest must-have service during the festival. The mobile payment market is booming in China. Every company is trying whatever they can to attract potential users," she said.

Statistics from WeChat, which claims to have 468 million monthly active users, show that in the 10 days around the 2014 Spring Festival, more than 8 million users took part in the scheme, exchanging over 40 million red envelopes.

Wang Weidong, an analyst with iResearch Consulting Group, is betting on WeChat eventually claiming the most red envelope participants during the upcoming Spring Festival, given its dominance as a social tool.

"However, that doesn't mean there isn't room for other players. After all, Alipay Wallet has 180 million users," said Wang.

"(The social media platform of) Weibo Corp, in which Alibaba has a stake, has also launched a red envelope service based on its own specific users. Different companies are playing it differently."