Alibaba to spend 656 million yuan on the campaign to lure users

It’s the Lunar New Year in China. People in the world’s most populous country traditionally exchange cash-stuffed ‘red envelopes’ to celebrate the new year. Since last year, giving red envelopes of cash online has become a new tradition. And it has now become the latest battleground in the mobile payments war between Alibaba and Tencent.

Alibaba Group Holding Ltd, Tencent Engage In A War Over 'Red Envelopes'

Alibaba, Tencent fight for dominance in mobile payment market

Last year, Tencent launched an app-based payment system that lets users send online red envelopes to family and friends. Now Alibaba has launched its own system using Alipay to rival Tencent, reports Want China Times. Mobile payment is at the heart of both Internet giants’ ambitions to grab a bigger chunk of the rapidly growing Internet finance market.

During the week-long Chinese new year holiday, the two companies are spending billions of yuan on prizes to attract users. Interested users can send animated red envelopes through Alibaba and Tencent’s respective payment systems. Last year, more than 8 million users participated in Tencent’s campaign.

Tencent blocks sharing on Alipay envelopes

Alibaba founder Jack Ma said that the company would send out red envelopes and coupons worth 656 million yuan to one million participating users via Alipay. The activities will begin on February 18. Alipay has also unveiled a service that lets corporate users gift cash-stuffed red envelopes to their clients. Following Alibaba’s announcement, Tencent said that it would give away 500 million yuan in cash and 3 billion yuan worth of coupons to WeChat users. Tencent has allocated another 3 billion yuan in cash and coupons for users of its other messaging app QQ.

When Alipay originally launched the red envelope gifting feature on its mobile app, it included one-click sharing via Tencent’s QQ and WeChat apps. But, within a day, Tencent blocked the instant sharing of Alipay envelopes. Then Alipay had to tweak the feature to retrieve and manually share the digital red envelopes through WeChat.

Alibaba shares rose 0.51% to $87.29 in pre-market trading Wednesday.