Alipay spends big to promote online payment service

Alipay, the country's largest third-party online payment platform and a subsidiary of Alibaba Group, has invested heavily in cab payment subsidies to promote its online payment service during the Lunar New Year period.

The move came on the heels of a similar subsidy program by Didi, a cab-hailing app with investment from Tencent. Didi's incentive, announced earlier this month, encourages passengers to pay taxi fares via Tencent's WeChat, a multi-media app combining instant messaging, content sharing and payment services.

Under Didi's incentive, which was announced on January 10, a passenger and taxi driver would each get a ten-yuan subsidy (1.65 U.S. dollars) if the passenger chooses to pay via WeChat, a move intended to promote WeChat's payment service.

To compete in the market, officials of Alipay and KuaiDi, a taxi-hailing smartphone app, announced on Tuesday that they would allocate an additional 500 million yuan in subsidies for passengers paying taxi fares via the app. They announced the subsidies one day after unveiling an incentive program similar to Didi's.

Didi's incentive has seen great popularity since its debut. According to the company's latest statistics, the number of bills paid via WeChat topped one million within the first seven days of the program, costing the company 20 million yuan in subsidies. Didi added 200 million yuan to its subsidy program on Monday.

But KuaiDi's new incentive will bring fierce market competition, as it allows a taxi driver to receive fifteen yuan for each bill, five yuan higher than Didi's incentive. The program will cover 40 major cities in China starting from Wednesday, according to KuaiDi.

Statistics from Analysys International (AI) show that KuaiDi has attracted about 23 million users in China, receiving over 300,000 payments on a daily basis.

Alibaba and Tencent both rolled out financial services and products in 2013 to expand their businesses to traditional financial fields, including payment, loans, remittance and finance.

Third-party payment service providers, such as Alipay and Tencent's Tenpay, have already become formidable players in the mobile payment market.

AI's statistics show the transaction value via third-party payment in China totaled 334.3 billion yuan in the third quarter of 2013, soaring 173.1 percent from the previous quarter.