Leading domestic e-commerce platform JD.com Inc and the nation's dominant bank card association China UnionPay on Wednesday announced a strategic partnership that could potentially enlarge the Internet company's presence in the payments sector, according to an analyst.
Chinabank Payments, a wholly owned subsidiary of JD, officially becomes a member of China UnionPay under the partnership, and the two parties will cooperate in online and offline payments, according to a joint press release.
The two will also cooperate in developing new payment products, issuing co-branded cards and offering financial services in rural areas, said the press release.
The cooperation will enable JD's payment services to go beyond the e-commerce platform itself, Dong Zheng, editor-in-chief at bank card information portal 51credit.com, told the Global Times on Wednesday. For instance, the credit services of JD, which allow users to make purchases on the e-commerce platform with installments, can now also be used offline under the partnership, he said.
Dong noted that the partnership also enables JD to get access to the offline payment infrastructure of UnionPay, which will save a huge amount of money for the Internet company.
The cooperation with UnionPay will potentially enlarge JD's presence in the payments sector, said Dong.
To become a member of UnionPay means that transactions concluded via JD's payment tools can be tracked by UnionPay, which is an important reason that the bank card association is willing to enter the partnership. UnionPay also seeks a stronger presence in the mobile payments sector, so it will benefit from the partnership with JD, according to Dong.
Transactions concluded on Alibaba Group Holding's Alipay, at least so far, can't be tracked by UnionPay, analysts said.
China's mobile payments sector is still dominated by Alibaba's Alipay as well as Tencent Holdings' payment tools, with the two accounting for 50.4 percent and 38.1 percent shares in the third quarter of 2016, respectively, according to a report from consultancy Analysys International on December 27.
JD wasn't even in the top 10, according to the report.
