Tencent takes a step back from competing Alibaba

According to the company (thedrum.com reports), WeChat Pay began charging users in March for transferring funds between the app and traditional bank accounts in order to bring operating losses from the service under control.

Formerly the company subsidised the bank transaction fees associated with the transfers rather than passing them on to users, resulting in the social networking group spending Rmb300m (GBP 31.5m) in fees in January alone.

More than that, in its fourth quarter, other revenue expenses increased by 153 percent, which the company said was mainly driven by bank transaction fees from WeChat Pay.

Subsidising the fees helped WeChat attract millions of users and boosted transaction volume, but now the shift of fees onto users gives its competitor Alipay a competitive advantage. The latter has since dominated the online payments market, securing over GBP 3bn in equity funding in the last few weeks.

In addition, Alibaba posted a 32 per cent growth year-on-year in revenue for its Q4 results, bolstered by a significant rise in mobile revenues. In terms of its international business, it said the strategy is focused on cross-border commerce that allows international brands and retailers to sell online to Chinese consumers.