Chinese online to offline giant Meituan has suspended Alibaba-backed payment tool Alipay as a payment option for some users on its services super app.
Why it matters: While not the first time it has suspended Alipay payments, Meituan’s move highlights efforts to fend off competition from the payment platform, which is moving into the local services sector—the company’s home turf.
- As the competition intensifies, China’s tech behemoths are raising the walls surrounding their respective ecosystems by blocking services from rivals or offering more benefits to ensure user loyalty.
Read more: Explainer: China’s tech ecosystems and the barriers between them
Details: Some Meituan users discovered on Wednesday that they were unable to pay with Alipay when placing orders for food delivery services on the app, Chinese media reported.
- The food delivery giant supports a range of payment options including its proprietary Meituan Pay, as well as Wechat Pay, Apple Pay, and payment services provided by Chinese banks.
- Only one out of around a dozen Meituan users TechNode reached out to on Thursday was unable to use Alipay on the Meituan app. How the company selects users is unclear.
- Meituan did not immediately respond to a request for comment.
- The move could indicate that the suspension will widen to more users, although it appears to only affect a small group of users as of Thursday afternoon.
- Meituan founder Wang Xing asked (in Chinese) in a social media post on Thursday, “Why doesn’t Taobao support Wechat Pay? It has more active users and lower transaction fees” (our translation) in a post on Fanfou, the social media platform he founded.
- An informal online poll in an online news story about the move gauged netizen sentiment on the tactic: 53% out of nearly 12,000 respondents said the move wouldn’t affect their lives, while 47% said it would have a great impact.
Context: Alibaba, which still holds a 1.48% stake in Meituan, was an early investor in the company. But the relationship between the two companies soured after Meituan joined rival Tencent‘s camp in 2016.
- The rivalry heated up after the e-commerce giant acquired food delivery platform Eleme in 2018.
- Alipay parent Ant Financial announced in March a plan spanning the next three years to build a digital ecosystem. The payment app aims to expand beyond financial services into a platform featuring third-party service providers which provide other lifestyle conveniences for its users.
- Ant Group, Alibaba’s fintech affiliate, plans for dual listings on Shanghai’s Nasdaq-style STAR Market and the Hong Kong Stock Exchange, reportedly targeting a $200 billion valuation, in what would be one of this year’s biggest IPOs.
- This is the third time that Meituan has blocked Alipay after two instances in 2016 and 2018. Meanwhile, Alipay rival Wechat Pay, the popular payment service developed by Meituan investor Tencent, holds a prominent spot on the app.