Taobao Fully Integrates WeChat Pay: Internet Giants Move Towards Interoperability

Taobao is set to fully integrate WeChat Pay, marking a new milestone in the "interconnectivity" of internet giants. This initiative, led by the Taobao-Tian Group, aims to expand into lower-tier markets and enhance transaction conversion rates and user engagement frequency. WeChat Pay is preferred by 83% and 78% of users in counties and townships respectively, significantly higher than the 76% in urban areas.

The integration of WeChat Pay into Taobao is of great significance. Previously, users who did not have Alipay installed would drop off during the payment process. Now, with WeChat Pay, transactions directly redirect to WeChat, streamlining the process. Tests have shown that this effectively attracts users from lower-tier cities. It is expected to add millions of daily active users, primarily from the elderly and younger demographics.

For Tencent, the partnership brings new revenue. Taobao's use of WeChat Pay incurs a "payment institution service fee." Merchants are also actively responding, as they can consolidate payment data to optimize marketing strategies.

Before this collaboration, the two giants had long been in competition, operating in silos. From 2008 to 2021, the platforms drifted further apart. The "3Q War" in 2010 marked the beginning, which was not resolved until 2014. In 2013, WeChat blocked "Laiwang," and Taobao blocked WeChat on mobile. Taobao had multiple attempts to access WeChat's traffic but faced obstacles.

In recent years, the internet environment has drastically changed, and interconnectivity has become a trend. In 2021, Tencent expressed its intention to relax external link controls, albeit gradually. Taobao's access to WeChat's traffic has been a bumpy journey, but it has finally been realized.

The two giants are gradually thawing, moving from a closed to an open approach. The ebb and flow of business is based on corporate development needs and is also a reflection of the zeitgeist.