Ant Financial sets up mini-program division to rival Tencent's WeChat

Ant Financial, a financial arm of China's e-commerce giant Alibaba Group, has established a unit to develop the mini-program business for Alipay to better compete with Tencent's WeChat, which has built an ecosystem allowing users to directly and instantly use app-like mini programs through its platform without separate downloads from app stores.

The establishment of the new division comes nearly a year after a successful trial operation of the mini-program service on Alipay, through which Ant Financial wants to link its portfolio of services ranging from food delivery to mapping and navigation.

Ant Financial said that individual developers are expected to take part in the development of mini programs in the following six months, with Guan Zhong, general manager of the mini-program unit, saying that his team is developing policies which will set higher thresholds for individual developers for a quality mini-program ecosystem.

Ant Financial is planning to spend 1 billion yuan in the coming three years to incentivize innovation by third-party mini-program developers, and will also cooperate with innovation funds for closer connection with these developers.

"Alipay has become one of the biggest apps in China's mobile Internet ecosystem. And the simplicity of mini programs could be an opportunity for external developers to provide various services to customers through the Alipay platform," said Guan.

Industry analysts say that the move could increase users' stickiness to the Alipay ecosystem, which would in turn be helpful in diversifying channels for profitability as the popular mobile payment service has 700 million users in China.

As of now, more than 20,000 mini programs are available on the Alipay platform, covering areas including retail, on-demand services, finance, education, medical care and public welfare, according to statistics from Alipay. The number of daily active users is about 120 million, said Alipay.

Besides, the mini-program ecosystem of Alipay could also benefit merchants by offering a marketing scenario where messages about coupons and other sales promotion activities can pop up after consumers complete payments through Alipay. Some 80 million merchants are registered on Alipay.

"This will undoubtedly meet the demands of merchants for accurate marketing," said Guan, adding that the focus will lie in the mini programs related to commerce, retail and on-demand services because of Alipay's position as a mobile payment tool.

"All the services related to 'money' in Alipay's mini-program ecosystem will have a natural advantage," said Guan.

Rivalry with WeChat

Alipay's move to boost the mini-program ecosystem is definitely targeted at Tencent's WeChat, which pioneered the use of mini programs on its platform in January 2017.

As of June, there are 1 million mini programs on the WeChat platform, with the number expected to hit the 3 million mark by the end of this year, according to statistics from aldzs.com.

In April, WeChat gave outside developers access to its mini-program platform and allowed them to get 50 percent share of revenues generated from advertisements. So far, WeChat has incubated several high quality mini programs whose operators have gained close attention from venture capitalists.

The popularity of the WeChat mini programs is based on WeChat's status as a social media app, which naturally means that WeChat users spend longer time on WeChat mini programs than the users of the Alipay mini programs. Tencent has said that WeChat has over 1 billion monthly active users.

Facing the challenge from WeChat, Alipay will initially concentrate on launching commerce-focused mini programs which will assure users of safety by using credit rating, real-name verification and rick control, said Eric Jing, executive chairman and chief executive officer of Ant Financial.