Chinese tech giant Tencent Holdings is reportedly aiming to integrate its QR code system with one of the country's largest payment services providers. Tencent is apparently in talks to integrate its systems with state-owned China UnionPay; a deal that is expected to provide Chinese users with more convenience.
The integration of the payment services will effectively allow users of both Tencent's WeChat Pay mobile payment services and UnionPay's Quickpass to use the same QR code to make online and offline payments. Currently, merchants are forced to offer two different codes for each company.
According to reports citing sources close to the transaction, the companies are apparently testing out their unified QR code system on select Android devices in Eastern China's Fuzhou city. Apart from integrating their QR code systems, both Tencent and UnionPay have also agreed to collaborate on the development and integration of a unified facial recognition-based payment system for future applications.
Its partnership with Tencent effectively makes UnionPay the third-largest digital payments service provider in China. Tencent's WeChat Pay under the firm's messaging and social media subsidiary WeChat and Alibaba's Alipay under its Fintech subsidiary Ant Financial are currently dominating the hotly contested market.
As of 2018, WeChat Pay and Alipay accounted for more than 90 percent of all mobile payments that were made in China. In a report published by market researchers, WeChat Pay currently has a penetration rate of around 89.2 percent in the mobile payments market. This is mostly thanks to the massive user base of its WeChat social media platform, which has over 1 billion users in China. Meanwhile, Alipay has a penetration rate of 69.5 percent but both companies are relatively equal when it comes to total transaction amounts.
The new partnership also gives WeChat Pay a slight edge over Alipay when the unified QR code system becomes available. Sources close to the deal have stated that Alibaba is currently not involved in a similar negotiation with UnionPay. However, Ant Financial is expected to initiate a similar agreement in the future as the Chinese government is actively pushing for a unified code-scan standard for the entire industry.
The establishment of a unified code-scan standard is part of the People's Bank of China's three-year plan for Fintech development, which was issued in August last year. The country's central bank listed the particular goal as a major task for the industry, which it wants to be completed by 2021.
China currently has one of the fastest-growing digital financial services markets, with over 583 million users paying for goods and services with online accounts through their mobile devices.
