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Text | Zinc Finance, Author | Chen Yan, Editor | Dafeng

In 2011, Alipay created the first QR code for mobile payment. Just take out your phone and scan it to complete the payment transaction.

This is a historic moment. Before this, consumers' transactions were basically cash and bank cards. Cash was inconvenient to carry, and not every merchant had a POS machine if they wanted to use bank cards. The emergence of QR codes has made payment simple and efficient.

However, 13 years ago, mobile devices were still in the popularization stage, not many people had smartphones, and QR codes were not widely used among merchants, so online QR code payment did not become popular in a short period of time.

Around this small QR code, in the next few years, the two major domestic Internet giants, WeChat and Alipay, launched a magnificent payment battle. From red envelopes to taxi-hailing to all aspects of daily life, online QR code scanning began to reshape all walks of life.

Looking back, China's online payment has gone through a very long process and has also witnessed the changes of the times.

Entering the PC era, the rise of online payment

Online payment in China actually originated from online banking in the PC era.

In the 1990s, as Internet technology matured, PC devices gradually came into the public eye. At the same time, bank card payments were also developing rapidly, with more and more people using cards, and the number of card swipes also increased, greatly increasing the volume of banking business.

The combination of various factors is stimulating banks to launch more convenient services.

In 1996, Bank of China took the lead in launching online banking services, but it was not until two years later that the first "online banking" transaction in the mainland was carried out on the Internet.

On the afternoon of March 6, 1998, CCTV employee Wang Keping used the online banking of Bank of China to buy a 10-hour Internet access machine from 21Vianet Communications Technology Co., Ltd., becoming the first person in China to make an online payment. The media at the time paid close attention to the incident and even made a detailed analysis of the entire process in the form of charts.

Not long after, Peng Qian, an employee of China Merchants Bank, used China Merchants Bank's "OneNet" online banking payment system to buy a batch of VCD discs worth 300 yuan from Xinke Entertainment Communication Co., Ltd. on the Internet.

At that stage, only a few people could actually use online banking payments, and the payment scenarios were relatively limited.

Because before the millennium, there were only 4 million Internet users in China, early computer equipment was very expensive, and online banking services required users to have certain computer operation skills and network knowledge. In addition, this is a new payment model, and many people are worried about the problem of fund theft, and would rather keep their money in their own hands.

It was not until the emergence of shopping websites in the PC era that the iteration of payment methods was accelerated.

In 1999, the first C2C website, Eachnet, appeared in China. It was also the year when Jack Ma led a dozen people to found Alibaba in Hangzhou. A few years later, Taobao was officially launched and online shopping entered the public eye.

Taobao PC page

At first, buying things online was a very troublesome thing. After placing an order online, you had to transfer money to the bank account and postal remittance address provided by the website. The other party would ship the goods after receiving the money. Later, some people also used online banking to pay. After placing an order, it would automatically jump to a bank list, plug in the U shield, enter the account password and other information, and transfer the money to the mall.

However, there is a problem with both methods, that is, the rights of consumers cannot be protected. Especially if the transfer amount is large, there is no channel for protecting rights when encountering online shopping fraud.

Thus, third-party payment companies officially came onto the historical stage as intermediaries.

In 2003, Alipay was launched, creatively solving the trust problem between strangers. You know, 20 years ago, it was extremely difficult to do guaranteed transactions between strangers. The trust relationship between people was not fully established.

But Jack Ma's determination allowed Alipay to firmly occupy the top spot in China's online payment in the following years.

The foresight in the PC era also laid the foundation for the payment war after entering the mobile Internet era.

In the era of mobile Internet, WeChat and Alipay share the world

While Alipay has become a national payment software, another national app, WeChat, has not yet entered the payment field.

It was not until August 2013 that WeChat Pay was officially launched.

A few months later, during the Spring Festival of 2014, WeChat Pay made a big move and launched the "WeChat Red Packet". During the Spring Festival, a period of concentrated traffic, WeChat Pay fought a good battle by grabbing red packets and trying luck.

On New Year's Eve alone, 4.82 million people used this function. In a few days, WeChat Pay allowed more than 30 million users to bind their bank cards.

On the other side, Alipay immediately sounded the alarm.

Before the Spring Festival holiday was over, Jack Ma temporarily recalled all the executives who were on vacation. The then CEO Lu Zhaoxi and COO Zhang Yong quickly booked the next flight. Wu Yongming, who was Jack Ma's special assistant at the time, was spending the holiday in Hawaii with his family and couldn't book a flight, so he directly chartered an entire plane.

The military order is as heavy as a mountain, and Hangzhou Xiaoshan Airport is brightly lit all night.

One of the parties involved once recalled to the media:“You can understand it as WeChat achieving what Alipay did in ten years in just one week.”

A major battle between WeChat and Alipay over payment is about to begin, which will become the most significant event in the history of China's mobile payments.

The taxi-hailing scenario is a key battlefield for WeChat and Alipay. Since 2014, WeChat Pay has been connected to Didi Taxi, and Alipay has been connected to Kuaidi. The two giants have used the taxi-hailing platform as a sword to start a payment subsidy war, with the investment amount rising from millions at the beginning to billions.

At that time, as long as one company's subsidies were slightly reduced, drivers and passengers would immediately turn to the other company, and the war became more and more intense.

Finally, at the cost of 1.4 billion in subsidies, WeChat Pay, which was only one year old, brought the number of users to 100 million, while Alipay, which had been established for many years, had just achieved this result five months ago.

From 2015 to 2017, WeChat and Alipay invested at least 2 billion yuan every year to compete for the payment market. From the Spring Festival Gala and the "Five Blessings" event to offline subsidies for supermarkets and restaurants, and the introduction of payment codes and ride codes, both parties want to compete for a piece of the pie in any payment scenario in life.

The reason why the two giants are focusing on scenarios such as travel and food is that they are the most common life situations, the most effective means to popularize mobile payment methods, and the main battlefield for competing for users.

Facts have proved that although Alipay has the first-mover advantage, WeChat, as the largest social software in China, has a large number of active users and extremely high online time, and has successfully snatched Alipay's mobile payment market share.

Over the past few years, Alipay's market share has dropped from nearly 80% in 2013 to 54%, while WeChat's has risen from 0 to 40%, and the two together occupy 94% of the market. In offline payment scenarios, WeChat's 70% share far exceeds Alipay's 20%.

Later, as the market gradually became saturated and regulatory pressure increased, this massive payment war finally came to an end.

The domestic payment market structure has been settled, with WeChat and Alipay dividing the world.

The payment war will never end

However, in the payment war, Alipay and WeChat have not really stopped.

Some time ago, Alipay announced that it has upgraded its barcode payment experience and launched “Alipay Touch”. The payment process has been simplified to the point where you only need to unlock your phone and touch the merchant’s payment device to complete the payment in one step. This eliminates the need to open the Alipay App and click on the payment code.

Since last year, WeChat Pay has completed the barcode payment interconnection function with the payment platforms of China Mobile, China Telecom, and China Unicom. The "Scan" function of the three companies' apps can directly scan the WeChat Pay personal payment code for payment. In June this year, the UnionPay network was also fully connected to WeChat Pay.

Whether it is optimizing the payment process or trying to integrate payment into more scenarios, behind all the actions of WeChat and Alipay is the emphasis on payment layout.

Neither of the two giants is willing to give up on payment.

At present, the connotation of payment is no longer limited to itself. Behind it are data, traffic, and relationship chains. It is the bargaining chip for Internet giants and the cornerstone of advancement.

WeChat and Alipay can build a closed ecological loop with the help of payment, including social networking, e-commerce, financial services, etc. It can not only enhance user stickiness, but also promote the circulation and conversion of traffic within the platform. This is also an important means for Internet giants to build competitive barriers.

The story of future payments continues.