The Chinese TikTok launches a payment solution
FACTS
- The Chinese company ByteDance is known worldwide for launching the social network TikTok.
- It also offers a Chinese version of this service, called Douyin, which has just launched its own mobile payment service.
- Douyin is also an e-commerce platform since 2017, used daily by hundreds of millions of users.
- These users can click on a link suggesting for sale the articles presented in the videos of their favorite influencers.
- This new payment service is called "Douyin Pay". It aims to complete the main payment options already offered on the platform (WeChat Pay and Alipay) and to enrich the user experience.
- It was launched following the acquisition of FinTech Hezhong Yibao's technology in 2020. The latter had obtained a payment license from the Chinese Central Bank in 2014, which now allows ByteDance to operate its payment service in China.
CHALLENGES
- Become a reference in e-commerce: the launch of this payment service is part of a broader strategy, targeted by ByteDance, which consists in offering e-commerce services on all its channels. In China, this service is widely democratized. In the United States, it took its first steps via TikTok during a marketing campaign conducted by Walmart. Via a live shopping experience, the American retailer sold items within the video streaming platform, carried by the social network's star influencers.
- Breaking the Alipay / WeChat Pay duopoly: it's a real gamble, as both players are extremely dominant on the market. But ByteDance has chosen its moment, the one when the Alibaba group is under investigation by the Chinese government which, in its worst outcome, could lead to dismantling the group. And where, generally speaking, the fintech sector has become the target of this government because of their pre-eminence in face of a non-existent banking system. Given Douyin's large audience, the launch of its payment solution could be an opportunity to open up a very profitable market for it.
MARKET PERSPECTIVE
- With its huge audience (600 million active users every day), Douyin is the most profitable division of the ByteDance group, thanks to its e-commerce activity. It foreshadows what TikTok could soon become, hence the tough negotiations with potential buyers of its American division.
- Douyin recently signed an agreement with the CCTV group (China's national television network) to be its payment provider for the exchange of the famous red envelopes during the Chinese New Year gala ceremony. A symbolic partnership that clearly shows the scope of ByteDance's ambitions.