Baidu and Sina Weibo plan to boost payment service business

Want China Times, Staff Reporter 2013-07-14

Baidu's logo. (Photo/CFP)

The People's Bank of China issued third party payment licenses to 27 companies on July 6, including Baidu's Baifubao and Sina's SinaPay.

Baifubao was launched on Sept 25, 2008 as an online payment and service platform. In recent years, Baifubao has been exploring the field of electronic commerce. The license grant is expected to benefit Baidu's e-commerce business.

According to China Business News, in addition to e-commerce, Baifubao is also eyeing personal payment services. Baidu had disclosed a structural adjustment plan in June, where it said it would form a department related to front-line payment collection, with a focus on personal accounts.

The most common online personal payment services involve online video games, e-commerce, music and digital reading.

At a summit in May this year, Robin Li, founder of Baidu, noted that, "payment services in the online video gaming sector are a 'tremendous' business."

The daily reported that there were more than 100 types of video games on Baidu's network and more than 100 million users. Video gaming could very likely become one of the main income sources for Baidu.

According to the daily, Sina was apparently aiming to secure a third party payment license. Currently, the Sina Weibo microblog has more than 500 million users, but revenue from advertising during the first quarter this year was only US$18.8 million. Seventy-seven percent of Sina Weibo's income comes from advertisement.

After Alibaba Group Holding invested US$586 million in Sina Weibo, Sina certainly hopes to take advantage of Alibaba's client resources to speed up its commercialization plan. Sina Weibo is also looking into other value-added services, such as online shopping malls and a membership system.

In terms of online business planning and strategy, the online competition is very likely to move from business patterns to other areas, such as user volume and partnership.

Senior analyst Zhang Meng said that after obtaining the licenses, both Baidu and Sina's business planning would involve more payment services for their own products, rather than payment services for outside businesses.

A report by the Payment and Clearing Association of China in June stated that the scale of the third party payment market in China had exceeded 10 trillion Chinese yuan (US$1.63 trillion) in 2012.