Alipay Vs. Tenpay – The China Payments Rivalry in 2019

Updated on September 11, 2019

Internet retail sales in China have boomed, and with it, the online payments ecosystem has grown. China’s internet giants, Alibaba Holding Group Ltd., and Tencent Holdings Ltd., have been the biggest players in this space and these two companies alone have handled ~ $3 trillion in 2016 which is around half the total consumer goods sold in China.

While Chinese users have adopted online payment wallets for making most of their payments, the users in the USA have continued to rely on bank-led means such as credit cards, debit cards, and payment applications that directly use the bank accounts for making transactions. This is one of the reasons banks in the USA have continued to make a significant amount of income from the online card-based payments and have also enjoyed a low-cost deposit base in the form of the savings account balance of the users. Since Chinese users have completely removed the banks from transactions, there is a common fear in the USA that such trends could potentially take away a large income source from the banks. As per a Bloomberg article, the loss in merchant fees for US banks could be as large as $43 billion by 2020. 


Source: Bloomberg article at


Alibaba Holding Group Ltd., is a network of e-commerce B2B businesses constituting an online marketplace, shopping search engine, retail & payment platforms, and more. It is led by Chairman Jack Ma, whose net worth is $3.6 billion. Alipay serves Alibaba in the same way that PayPal serves Amazon and eBay. It is the online payment services provider founded by the Alibaba group in 2004 that allows individuals and businesses to make secure payments online. Alipay has collaborated with VISA and some leading Chinese banks, including Bank of China, China Construction Bank, Agricultural Bank of China, and the Industrial & Commercial Bank of China.

Alipay provides solutions for Taobao and along with more than 500,000 external merchants for virtual gaming, online retail, digital communications, air ticketing, commercial services, and utilities fee payment transactions.

Available payment options include both immediate bookings, such as for hotel rooms and flights, and escrow services, where Alipay pays the seller when a product is shipped. The buyer can choose between escrow and immediate payment.

Foreign companies must pay a $1,000 set up fee and are charged a 2.5-3% transaction fee depending on their annual volume. The setup fee is waived for Chinese companies; transaction fees range from 0 .7 to 1.2% of annual sales with a $5,000 minimum.

According to a report by the China Post, Alipay had 800 million registered accounts by the end of April 2013, making it the largest in the world.  PayPal claims 132 million users across 193 countries.


Tencent Holdings, founded in 1998 by Chairman & CEO Pony Ma, provides Internet, mobile, and telecommunication value-added services in China and is Alipay’s main competitor in the payments industry.

Tencent’s QQ instant messaging service had 818 million monthly active users by June 2013, according to Bloomberg. Tenpay users can send and receive payments, withdraw money from bank accounts, charge mobile, deposit money on game accounts, and buy airline tickets. Tenpay has more than 80 financial institutions and more than 300 access points. According to L’Atelier, the company has partnered with more than 1.1 million merchants spanning 20 industries, including travel business, insurance, online shopping, logistics, clothing, and education.

Tenpay offers two payments options:

  • Escrow: 100% free with no setup, transaction or withdrawal fees
  • Instant payment: Free setup, 1% transaction fee.

Comparison: Alipay accounted for 48.3% business of the online payment market, while Tenpay occupied another 20.1%, according to iResearch Global Inc.’s statistics for the first quarter of 2013.

The competition for customers is driving innovation. Instant messaging is the most popular online application, with more than 84% of China’s internet users, according to a report by Bloomberg. To compete against Tencent’s WeChat, Alibaba released Laiwang, an application that allows users to form group chats with 500 users and share videos, stickers, and maps. A new feature includes an automatic message eliminating function called “burn after reading,” and private picture albums and a screen lock function are also in development. Laiwang has about 1 million users. The difference between the two systems is in payments integration. WeChat has enabled payments through their app for users (read our article on WeChat) while Laiwang has left their app as purely a social platform.

MEDICI's View: According to the China Internet Network Information Center, the number of people accessing the Internet through their mobile phones rose to 464 million by June 2013, a 10% increase over the previous six months.  This growth is good news for payment systems such as Alipay and Tenpay. With a larger subscriber base of 800 million and greater revenue, Alipay may be leading the way in the Chinese payments industry. However, Tenpay’s innovation and introduction of payments in its WeChat system are making gains in the payment market.

Also read: Alipay’s rivalry with WeChat continues, Partners with Sina for Weibo Payment