Tencent Squares Up to Alibaba on Mobile Fares for Public Transport
Duan Qianqian
DATE:  May 28 2018
/ SOURCE:  Yicai
Tencent Squares Up to Alibaba on Mobile Fares for Public Transport Tencent Squares Up to Alibaba on Mobile Fares for Public Transport

(Yicai Global) May 28 -- Tencent Holdings, China's biggest tech firm by market value, is in talks with 70 cities to roll out mobile payments for public transport as it looks to go head-to-head with rival Alibaba Group Holding in yet another sector.

Some of the cities have already penned deals while others are still in negotiations, Lei Maofeng, deputy general manager of Tencent's payment platform WeChat Pay, told Yicai Global on May 26. The scheme will allow travelers to use their mobile phones and scan a QR code to pay for journeys on public transport.

"Public transport is the next high-frequency application for small-amount QR code payments to help retain users," added Pony Ma, chief executive of the Shenzhen-based firm.

China's vast number of daily travelers will give payment providers, including Apple, enormous amounts of data, which will prove a precious asset. By linking this information with a range of applications, Tencent will be able to advance the digitization of smart transport, Lei added.

An e-ticket mini program developed by Tencent and Shenzhen Tong, which operates a smartcard used for public transport payments in the southern tech hub of Shenzhen, has over 600,000 daily users making more than 1.2 million transactions, according to Tencent data. There are also more than 250,000 using the firm's social media app WeChat to pay for metro rides, making 350,000 journeys per day.

Finding Partners

Coordinating with interested parties has been the toughest part of popularizing QR code payments, Lei said. Buses and metro systems are the lifeblood of urban transport and local governments are keen to advance smart operations, but the scale of the change makes it an enormous project, he added.

"It's not like a restaurant that can easily adapt to WeChat Pay," he said. "It requires the alteration of hardware facilities like ticketing machines on buses and turnstiles at subway stations, which isn't cheap."

The bus and metro operators also want to lead the transformation projects, he continued. "Other parties want to produce similar services, and as an internet company we need to coordinate with them."

No Exclusive Deals

Another issue payment providers face is securing exclusive agreements with partners, as the state-owned firms behind the transport operators are unable to rule out deals with rival companies.

"It is impossible for the government to give exclusive rights to one company," Lei said. "The only thing separating competitors is who gets their first."

Both Tencent and Alibaba began offering their services in their hometowns. Alibaba quickly captured the Hangzhou subway system, and said at the beginning of this month that Alipay was accepted for bus tickets in 50 cities and was hoping to take on another 50 within the next year.

Upgrading Smart Transport

"Transport services are a key part of Tencent's business," Lei said. "We are acting as a city assistant. The public transport system represents infrastructure, and we're the water and electricity."

QR code payments for public transport are just one of two parts of the company's business in the sector, he continued, saying private car services were the second. There are 20,000 gas stations nationwide now accepting WeChat Pay, which halves the time it takes for drivers to fill up, he added.

Shenzhen Baoan International Airport also adopted WeChat Pay at a parking lot from May 21. The addition slashes the time it takes for cars to access the lot by as much as 80 percent.

The data Tencent collects from its transport services is a treasure trove of information detailing when, where and how often users travel. "We hope to transform this information into visible data flows to form a transport management network tailored to each individual's behavior," Lei added.

The firm also plans to roll out services providing detailed information on user locations, advising where a user is, where they came from, where they are headed and how they are traveling. These will connect with other frequent-use big data fields, such as catering, retail and entertainment, which are the first batch of sectors to be connected with Tencent's smart city system.

Editor: James Boynton

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Keywords:   TENCENT,Smart Public Transport,WECHAT PAY,Big Data,QR Code Payments