Chinese internet giant Baidu has launched an electronic payment service, called Baidu Wallet, in another sign of the rising competition for internet-based financial services in China.
Baidu's new system provides money transfers, online purchase payments and utility bill payment for its users. It was launched on April 15, eight months after the internet company received a third-party payment licence from the People's Bank of China (PBoC).
“In the age of mobile Internet, Baidu has been building an ecosystem where our users and developers/partners can flourish. We saw that developers/partners have needs in retaining users and payment services, which is why we launched Baidu Wallet,” said Li Mingyuan, vice president, mobile and cloud business group, Baidu, in a press release.
“All of the heavyweight Internet platforms view mobile payment as too important to miss,” noted Hong Kong-based JP Morgan equity analysts Alex Yao and Yong Wang in an April 9 research report.
The analysts believe offline clearing and settlement service provider UnionPay will be the company whose operations are “likely to be disrupted”. UnionPay is the incumbent player with the largest market share in card and electronic payments in China, having processed Rmb32bn ($5.13bn) in transactions in 2013.
The rise of mobile payments platforms is likely challenge the status quo, although the extent to which it will do so is uncertain given the ambivalent signals by the Chinese central bank towards online payments and internet finance companies, as Asiamoney recently reported.
Recent media reports pointed to an agreement reached earlier in April between the China Banking Regulatory Commission (CBRC) and the PBoC aimed at providing guidance on the relationship between commercial banks and third-party payment companies. The agreement, as of yet unconfirmed by the two authorities, supposedly covers the areas of user information protection, identity verification as well as revised limits to each transaction through electronic payment systems.
The Baidu Wallet service, according to a company spokesperson, will complement the existing money management services offered by the company through its “8.baidu.com” platform. Baidu confirmed in an email response to questions that the two platforms will be connected in the near future.
At the moment, Baidu is enrolling corporates in the retail sector that want to use the service to process their online transactions. Baidu is competing for market share in the e-payments business in China with the two other largest Chinese internet company, Alibaba and Tencent, who have already launched their own e-payment services recently.
As the latest entrant, Baidu is attempting to capture market share by offering what it claims are lower fees than its competitors for the first 10,000 businesses that will join the platform, as well as extending Rmb1bn worth of coupons to attract users to the service.