Video app Douyin introducing mobile payment service
January 26, 2021 Category China News Round-up, Weekly
Popular short video app Douyin has entered China’s digital payment market with its mobile payment services, looking to tap into the sector dominated by Alibaba Group Holding’s Alipay (54% market share) and Tencent Holdings’ WeChat Pay (39%). The setup of Douyin Pay is to “supplement the existing major payment options, and to ultimately enhance user experience on Douyin”, ByteDance, the company behind Douyin, told China Daily. It said the new function was launched only recently but had gone through several test runs. Typical payment scenarios in Douyin include tipping live-streaming hosts, purchasing goods endorsed by merchants, as well as buying paid-for content. Douyin Pay allows users to link bank cards from 10 Chinese commercial banks such as Bank of China (BOC) and China Merchants Bank (CMB). Douyin Pay has no QR code available for conducting offline transactions, which is available on Alipay and WeChat Pay. ByteDance has applied for the “Douyin Pay” trademark and obtained a payment license last year. The company also confirmed that Douyin would partner with China Central Television (CCTV) on the distribution of virtual red packets, which has become a tradition during the Spring Festival Gala in recent years, the most-watched show on Chinese TV.
China’s mobile payment market is expected to surpass CNY600 trillion in 2020 and will continue to show high-speed growth, according to a report by Hua Chuang Securities. The brokerage said mobile payments can effectively increase the number of purchases by 23%, assisting in driving domestic consumption. “Social distancing due to the Covid-19 pandemic has prompted consumers to spend more time online. As a result, payment services are crucial to reviving business and spurring consumption,” said Wang Pengbo, Analyst at consultancy Analysys. With 600 million daily active users, Douyin is becoming a fast-rising channel for brands to draw new users, retain customers and promote products. It also plans to establish a dedicated e-commerce business unit Douyin Stores, as the lines between social networking, short videos and e-commerce sites are becoming increasingly blurred. The company hopes to establish an e-commerce system instead of being a mere marketing channel for other e-tailers. “With proper settings, Douyin is able to form a closed-loop from attracting customers with products to facilitating their purchases via the Douyin app, according to Maggie Wang, President of Miaozhen Systems’ business intelligence and analytics unit, as reported by the China Daily.
“It’s possible that late movers can stand out in some particular application scenarios,” Mu Chu, Analyst at mpaypass.com.cn, a Shenzhen-based mobile payment intelligence provider, told the Global Times. Douyin, as the dominant player in China’s live-streaming arena, has a natural advantage. It can bring huge traffic to its payment service when viewers watch a live-streaming show and pay for products, Mu said. “Payments have become typical and necessary features for big internet players in China, due to their linkages with valuable data and services,” independent analyst Liu Dingding said. “E-commerce has undoubtedly become a key segment that ByteDance wants to develop for the Douyin app, and achieving self-reliant payment services is a necessary move toward that,” Liu added.
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