China’s third-party mobile payment market reached RMB 47.2 trillion ($7.01 trillion) in trade volume in the fourth quarter (Q4) of 2018, a 7.8% quarter-on-quarter increase, according to a newly released report from Beijing-based market consultancy firm Analysys.

Ant Financial’s Alipay retained its market dominance with 53.8% market share. Tencent’s Tenpay, which includes WeChat Pay and QQ Wallet, came in second with 38.9% market share. The Chinese payment duopoly comprised a combined market share of 92.7%, according to the report.

Fourth quarter seasonality driven by Chinese e-commerce festivals such as Singles Day on Nov. 11 and Double 12 sales on Dec. 12 contributed to the quarter-on-quarter growth. However, growth figures are considerably slower compared with the same period a year earlier, when transaction volume jumped 27.9% quarter-on-quarter.

Another factor is market saturation, which is nearing. In order to drive growth, payment service providers will have to build their own ecosystems, including value-added offerings such as wealth management, insurance, credit and loans, said Yao Zeyu, an analyst at China International Capital Corporation. He noted further that Alipay is well-positioned in these segments.

In the increasingly competitive domestic market, Chinese mobile payment providers continued to expand mobile payment coverage as well as penetration at public transport and other use scenarios during the quarter. Some businesses utilize mobile payment gateways to help drive the digitization of supply chain at restaurants and retail outlets.

Alipay’s transaction volume was supported by growth in Ant Financial’s online cash management platform Yu’e Bao, which has seen assets under its management grow 80 times by end-year since introducing money market funds in May, its 2018 financial report showed. Ant Financial’s micro-lending units—Huabei and Jiebei—and other financial services offerings on online shopping sites also helped Alipay retain its market share.

Alipay’s fee-free policy on credit card repayments supported growth in the company’s personal finance segment in the fourth quarter. However, it started charging credit card bill pay fees this week.

Tenpay continued to leverage its social networking platforms and maintained steady growth in its payment user base.

Tencent-backed Pinduoduo,, and Meituan also helped drive transaction growth in the fourth quarter during e-commerce shopping festivals, the report showed. E-commerce, group buying, and food delivery contributed to Tenpay’s growth.

Nicole Jao is a reporter based in Beijing. She’s passionate about emerging trends, news, and stories of human interest within the world of technology. Connect with her on Twitter or via email:

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