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Internet firms vie for clients with New Year cash bonanza

2015-02-12 10:42 Global Times Web Editor: Qin Dexing

Free cash a way to promote mobile payment apps

China's Internet giants are using virtual hongbao (red envelopes filled with money) in the run up to the Spring Festival in a move to entice more users to the country's booming mobile payment market, analysts said Wednesday.

Alibaba Group's payment arm sent 57 million yuan ($9.12 million) in cash Wednesday through Alipay Wallet, a mobile payment app. It plans to give away hongbao filled with cash and coupons worth more than 600 million yuan starting Wednesday until February 19 - the first day of the Chinese New Year.

"No one wants to miss the chance to attract more users during China's most important festival, and hongbao have become another method for Internet giants to pour money into, following taxi-hailing apps," Lin Wenbin, an analyst with IT consultancy Analysys International, told the Global Times.

Giving away hongbao to family members and friends has been a Spring Festival tradition for generations in China.

Alipay's move Wednesday attracted millions of Chinese smartphone users to join its "red envelope grabbing" game. Users who logged into its app at certain times of the day could try to grab a hongbao released by the company.

According to Alipay data, 2.1 million users grabbed the envelopes containing cash or coupons on Wednesday morning. Some posted details of their earnings on the Internet, which ranged from 1 to 5 yuan in cash to coupons for taxi-hailing services and overseas tourism.

But more people complained on social media that they got nothing.

"The game is not easy to play, and it is so disappointing that I grabbed nothing, but I'll keep trying," Chen Juan, a 30-year-old white collar worker in Beijing, told the Global Times Wednesday.

Other Internet companies including Tencent Holdings, Weibo Corp and Baidu Inc launched their own hongbao promotions, either using their own money to send out cash and coupons to users or allowing people to send hongbao to each other.

Tencent announced Monday that it will partner with retailers to send out more than 500 million yuan in cash, with the largest single prize of 4,999 yuan and more than 3 billion yuan in coupons through its social networking app WeChat starting from Thursday.

Weibo, in which Alibaba has a stake, launched a 1-billion yuan red envelope campaign in partnership with Alipay on February 2, allowing celebrities, popular microbloggers and enterprise users to send red envelopes with cash and coupons to other users.

While the handouts may seem generous, the virtual offerings are part of the Internet giants' strategy to increase their presence in China's growing mobile payment market, analysts said.

In 2014, Tencent's WeChat launched the red envelope feature several days later than Alipay, but was the biggest hit thanks to its strong social networking function that allows users to send red envelopes to friends and family. More than 8 million users participated in WeChat's red envelope spree during the 2014 Spring Festival holidays.

"Launching the red envelope feature is an effective way of encouraging users to bind their bank cards to payment apps," Ding Daoshi, managing editor of IT website sootoo.com, told the Global Times. To get the money they "won" from social media platforms, smartphone users have to install a payment app and enter their ID and bank information.

Alipay, similar to eBay's Paypal, has long dominated China's online payment market through its e-commerce platforms Taobao and Tmall.

According to data from consulting firm iResearch, Alipay accounted for 82.6 percent of China's third-party mobile payment market by the end of September 2014, followed by Tencent's payment tool Tenpay, which had a 10 percent market share.

Before WeChat launched its red envelope feature, Tenpay only accounted for 4.2 percent of the mobile payment market by the end of September 2013, ranking No.3 after Alipay and Lakala, an independent mobile payment app, the iResearch data showed.

"Alipay has already felt the threat from WeChat's mobile payment tool, which has quickly grown into the second-largest in the mobile payment market, so it has put more effort into the red envelope feature this year," Ding said.

The total transaction volume in China's third-party mobile payment market reached 7.77 trillion yuan in 2014, surging nearly 500 percent from a year ago, according to data released by Analysys International in January.

But some still worry about the potential risk. "I don't want to take the risk of disclosing my bank card information to these Internet companies just to get a few yuan," said Zhao Na, a 32-year-old resident in Beijing.

With major Internet firms' participation, Lin also expects the Spring Festival to become another important marketing campaign like the so-called Singles' Day, which falls on November 11 every year and which has become the biggest online shopping day in China.

"Besides sending cash, Alibaba, Tencent and Weibo have also teamed up with retailers to send coupons, making the hongbao tradition more commercialized," he said.

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