Alipay, the online payment arm of e-commerce magnate Alibaba, remained the market leader in China’s third-party online payment market with a 54.1% share in the fourth quarter of 2016. They are trailed by rival Tenpay (财付通 in Chinese), the mobile payment service by internet giant Tencent, at 37.02%, a report by market research service Analysys shows (in Chinese). (Tenpay encompasses both WeChat Payment and QQ Wallet).

According to the report, China’s third party mobile payment market had a total transaction value of RMB 12.8 trillion in Q4 2016, up 41.7% QoQ, and 126% YoY.

With Alipay and Tenpay taking the lion’s share, other players combined took less than 10% shares in the market in Q4 2016.

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Image credit:Analysys

Apple Pay, which enjoyed great popularity in the United States, continued its tepid growth in China during the period, and did not even make to the top ten list.

While Alipay still dominates online payment, its lead over Tenpay is narrowing. Alipay’s share fell by 9.3 percentage points in Q4 from Q1, while Tenpay saw its share rise by roughly 14 percentage points during the same period.

WeChat Payment, the mobile payment solution developed by Tencent’s Tenpay, has been growing fast since its launch in August 2013.

The continuous rise in market share for Tenpay is largely due to WeChat’s vast user base (MAU reached 889 million) as well as its rollout of a slew of new features such as the WeChat red packet during the lunar Chinese new year of 2014, a digital red envelope with money given as a gift to family members and friends.

During the 24 hours of Lunar New Year 2017’s Eve, 14 billion red packets were gifted and accepted on WeChat, up 76% year on year. WeChat’s inclusion of red packets in 2014 has proven to be a resounding success in creating more payment demand, shaping user habits, and increasing user engagement towards the mobile payment system.

In contrast, Alipay lacks such vast social networking user base enjoyed by the WeChat mobile messaging app.