China’s leading provider of smart devices Huawei has marched into the territory of online payment, which is so far still under the duopoly of two Chinese tech giants’ innovations: Alipay and WeChat Pay, despite China’s anti-monopoly efforts.
The new service known as Huawei Zhifu (or Huawei Payment) is not to be confused with the already existing Huawei Pay. Huawei Zhifu is a service approved by the People’s Bank of China, which is supported by Shenzhen Sharelink Network, a digital payment service provider acquired by Huawei.
Huawei Zhifu is embedded in Huawei Wallet with features including balance top-up from over 160 domestic banks, cash withdrawal, and digital red envelopes. Additional functions such as a financial tool enabling finance management and marketing analysis make it much more alike to Alipay and WeChat Pay.
Huawei Pay, however, is a collaborative product with Union Pay (a Chinese bank card service provider), which has been live since 2016 but has limited services including online and NFC payment, and payment through Union Pay’s QR code.
The Chinese telecom company has long been laying out its entry into China’s mobile payment market, with last year’s acquisition of the payment-based business being a further stride, which helped Huawei secure a payment license.
Huawei’s latest move does not come as a surprise, considering the company possesses over 730 million monthly active users from across the globe so tapping into the online payment market is a rather natural progression of a mobile device provider to leverage its user base. It would also allow Huawei to capitalise on the growing demands for such service in China, with China’s digital payment users reported to have hit 904 million at the end of 2021.
While Huawei is actively pushing for the rollout of this new service, it is expected to be a hard journey to gain a slice of market share from the two market players, who have so far dominated more than 90% of China’s third-party online payment market. Moreover, given the much larger existing user base of Alipay and WeChat Pay at 1.2 billion and 1 billion respectively as of 2021, one of the biggest challenges facing the market entrant is how to convince users who are already accustomed to current offerings by Alipay and WeChat Pay to shift to Huawei’s service, which doesn’t seem to be too different.
So far, Huawei Zhifu has been made available for all Huawei’s services including music, videos, mobile themes, and e-books, as well as some third-party applications, such as Mango TV and the Chinese podcast start-up Ximalaya. It remains to be seen if Huawei Zhifu can extend its service reach and cover wider business scenarios that can truly shake the market status of Alipay and WeChat Pay.
