China’s fast-growing mobile payment market may offer plenty of room for Baidu to squeeze into the segment, but competing with incumbents Alibaba and Tencent (00700.HK) will still be an uphill struggle for the internet search leader.
Baidu officially launched its online payment system ‘Baidu Wallet’ on Tuesday. As it embarks on a new voyage, what are the weapons that the company can count on?
With 600 million active users, Baidu’s dominance in the search market will play a pivotal role in promoting the mobile payment service.
For instance, if a user types in the word ‘flowers’ on Baidu’s search engine, the flower sellers who have linked up with Baidu Wallet will come out on the top of the result list. If Baidu can turn half, or even just a quarter, of its regular search users into Baidu Wallet fans, it will already be a critical mass.
Other Baidu siblings will pitch in too. Baidu Wallet will be linked up with all other Baidu applications or major business units within the group, including Baidu Map, online travel agency Qunar.com, online video sites iQiyi & PPS and group-buying site Nuomi.com.
Want to buy something online, book a ticket, invest money, watch a movie, or look for a restaurant? No problem, Baidu Wallet will be there to help customers settle the transaction.
Coming from behind, Baidu’s another strategy is to offer its service at a discount to lure customers away from rivals.
Vendors normally pay around 0.6-1.2 percent of the sales amount to online payment platforms as fee. Weixin Payment is reportedly charging the lowest service fee at the moment. Baidu has pledged to offer a 12 percent discount to the lowest fee in the market, meaning a fee of just a tad above 0.5 percent.
And, if the transaction is completed through Baidu’s latest payment system from the PC terminal, there could be no service fee on the seller at all.
Online video operator LeTV, appliance retailer GOME and Huaxia Fund are some of the household brands that have already hooked up with Baidu Wallet.
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