Alibaba to Offer Payment Services From Rival Tencent, Easing Barriers Between Chinese Tech Giants

By Raffaele Huang and Tracy Qu

China's Alibaba Group will offer payment services from rival Tencent on its biggest online marketplaces, a milestone toward breaking down the walls dividing Chinese internet giants.

The move comes as Beijing wraps up years of antitrust scrutiny of Alibaba.

Shoppers on Alibaba's domestic shopping sites Taobao and Tmall can use WeChat Pay, the payment tool within Tencent's do-everything app WeChat, to pay their bills soon, according to a notice Alibaba sent to merchants seen by The Wall Street Journal. The change is set to be effective in weeks, a person familiar with the arrangement said.

The Chinese e-commerce giant has tested the payment tool, the main rival of Alibaba's affiliated Alipay, with a small pool of users since early this year, according to people familiar with the matter. The tests showed that allowing access to WeChat Pay would help Alibaba acquire users, especially people from smaller cities, the people said. WeChat has 1.37 billion users.

The company has "actively explored interoperability and partnerships" with peers, a representative of Alibaba's domestic e-commerce business, the Taobao and Tmall Group, said in a statement.

Tencent said it is "open to working with partners to offer convenient, compliant and secure transactions for consumers".

China's consumer internet has long been split into camps built around big companies such as Alibaba and Tencent, which blocked each other's services and links. Consumers couldn't pay with Tencent's payment tool on Alibaba's platforms and vice versa. This prevented users from seamlessly jumping among services and apps offered by rival companies.

This longstanding practice has drawn the ire of Beijing, which in late 2020 started cracking down on the country's freewheeling internet sector. In 2021, Chinese regulators ordered internet companies to open up their "walled gardens."

Some services and apps of Alibaba, including food delivery platform Ele.me and the YouTube-like streaming site YouKu, have since moved to offer WeChat Pay to their users. Tencent's WeChat also started allowing users to access Taobao links in the messaging app. WeChat users previously had to copy and open such links in a separate browser.

Alibaba's bread-and-butter e-commerce business has slowed down in recent years amid a cooling Chinese economy and cutthroat competition from rivals like Temu's Chinese sibling Pinduoduo. In the April-June quarter, sales of its biggest business group, Taobao and Tmall Group, fell 1% from a year earlier to $15.6 billion.

The e-commerce company has pledged to improve the user experience on its platforms, including investing in artificial intelligence and providing less expensive offerings.

Last week, China's antitrust watchdog said Alibaba has ceased monopolistic practices that triggered a probe more than three years ago and led to a record $2.8 billion fine.

Write to Raffaele Huang at raffaele.huang@wsj.com and Tracy Qu at tracy.qu@wsj.com

(END) Dow Jones Newswires

September 04, 2024 06:11 ET (10:11 GMT)

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