U.S. retailer has abandoned Alipay and instead opted for the mobile payments app of Tencent in Western China. This has been viewed as a blow to Alibaba as the Chinese online retail giant and Tencent are fighting for dominance in the payments market estimated to be worth $15.5 trillion. The payments sector has turned into a key battleground in China for local firms.
In China Walmart is one of the largest foreign retailers and has been using Alipay in more than 400 stores located across the country. The situation has however changed in Western China, a region that comprises of provinces that include Gansu, Yunnan and Sichuan. Compared to the wealthier eastern parts of China, the western part is more sparsely populated.
Thin profit margins
While the profit margins of payments are thin, the service is a gateway to more profitable financial services that include asset management, insurance and loans. Alibaba’s payments affiliate, Ant Financial, for instance runs a money market fund known as Yu’e Bao which is the biggest in the world as it has under management around Rmb1.5 trillion.
Though Alibaba is the industry leader with regards to payments Tencent has been steadily growing. One of Tencent’s earliest wins was getting accepted at Stabucks’ outlets located in China long before Alipay. In making the move Walmart did not say why it turned to Tencent.
“This business decision is intended to help us offer the best all-round shopping experience for our customers. WeChat Pay is widely accepted and trusted in China,” saidWalmart in a statement.
Power of activism
This comes in the wake of Walmart announcing that it will no longer sell Cosmo magazines from the checkout lines. The publication which is famous for its provocative will however still be sold by the retail giant but not in the usual prominent space. Walmart said it was a purely business decision though an advocacy group has said that the move constituted a win against sexual exploitation. According to the Hearst Communications-owned Cosmo, its readership is over 18 million on a monthly basis. Per the National Center on Sexual Exploitation, an advocacy group, the magazine promotes pornography with its degrading and hyper sexualized article titles.
In the United States rising political and social activism has forced various corporations to evaluate their business practices. Recently for instance Walmart stopped selling guns to anyone below the age of 21 following the massacre of 17 students in a school in Florida.