Tencent ties up with American Express to challenge Alipay
Updated: 2011-09-29 07:53
By Emma An (HK Edition)
China's largest Internet company, Tencent Holdings Ltd, said on Wednesday that it will team up with American Express Co to offer a cross-border online payments service, a move expected to help Tencent build up its share of a market still ruled by Alipay, the online payment division of e-commerce giant Alibaba.
The deal will allow users of Tencent's Tenpay online payments service to buy goods on US and UK websites using an American Express online shopping service called "globaleshop".
Tenpay General Manager Luke Liu said in a statement Wednesday that the arrangement will help Tenpay "rapidly expand the scope of our business and accelerate our move into offering cross-border online payments services".
American Express Vice President Dave Keung noted that it is the first time the company has worked with a third-party online payments provider in China.
"Overall, it's a positive thing," said a Hong Kong-based Internet analyst who asked not to be identified. "It will help Tencent delve into the high-end consumer base of American Express."
The supremacy of Alipay, with a 45.5 percent share of the domestic third-party online payments market as of the second quarter, is not under threat, the analyst added. The 45.5 percent share is simply "too big to change any time soon".
"Alipay absolutely has the lead", he commented. But the latest deal will help Tencent increase its market share and get an edge over the rest of the competition in providing cross-border online payments, he added.
Beijing research firm Analysts International's data show that after Alipay, Tencent's Tenpay has a 21.2 percent share of the third-party online payments market on the mainland as of the second quarter, followed by Union Pay with 11.1 percent.
Tencent ended 3.38 percent higher at HK$165.4 on Wednesday. The past three months saw the company's share price slump 22.61 percent after it posted the lowest profit growth in nearly four years in the second quarter as higher costs for expansion and acquisitions squeezed margins.