26 April 2019

UnionPay ups the ante in internet finance battle

Third-party payment behemoth UnionPay has raised the stakes in online wealth management and internet payments, launching its Tian Tian Fu {天天富} product last week through its wholly owned subsidiary, China UnionPay Merchant Services.

Tian Tian Fu, which means “wealth every day”, is a joint effort with Everbright Pramerica Fund Management and is very similar to rival Alibaba’s smash hit Yu’E Bao.

But, unlike Yu’E Bao, which targets online shoppers, Tian Tian Fu’s target clients are mainly merchants and businesses.

There are about 2.3 million UnionPay accounts held by merchants all over China and many contain idle short-term funds, earning no interest or investment income. Through the new service, merchants can earn a return on these balances. 

Financial data provider Wind Information says Everbright’s money market fund had a yield of about 3.18 percent last year, almost 10 times the interest rates banks pay on current accounts.

UnionPay’s move is a smart one — it avoids direct competition with Yu’E Bao’s pitch to small online depositors and takes full advantage of its comparative strengths in the merchant sector. While consolidating its already gigantic share of the third-party payment market, Tian Tian Fu will also be UnionPay’s passport to a stronger presence in internet finance.

Vibrant is the best word to describe the third-party payment market in China. Total transaction volume in the sector surpassed 10 trillion yuan last year, according to CCID Consulting Company (08235.HK), meaning that a one percent service fee could translate into 100 billion yuan of revenue for these firms. 

UnionPay dominates the overall field, with a 45.9 percent market share last year, while Alipay is a distant second with 17.5 percent of the fast-growing pie.

But Alipay has its edge in the online payment market. It reportedly controls about half of this sector, which is growing at a much faster pace. In 2012, online, or internet third-party payments, accounted for 37 percent of the total, or 70 percent more than the year before.

UnionPay’s share in the cyberworld was less than 10 percent last year but the launch of Tian Tian Fu signals UnionPay’s is not content for it to stay that way. 

What will Alipay’s next move be?

– Contact the writer at [email protected]



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