Pinduoduo (NASDAQ: PDD) has quietly launched its own payment channel Duoduo Zhifu, or Duoduo Pay, providing its 731.3 million users another option beyond WeChat Pay and Alipay. This comes as gross merchandise volume on Pinduoduo has reached nearly RMB 1.5 trillion (USD 214.7 billion) in the twelve-month period that ended on September 30, up 73% year-on-year.
With its own payment system, the group-buying giant will be able to lower its costs for financial transactions. In 2019, Pinduoduo paid Tencent, which is one of its investors, RMB 516 million (USD 74.6 million) for payment processing, according to its annual report. Duoduo Pay will also allow the company to have a closed loop of data by keeping payment information within its own system.
Large Chinese tech firms, including e-commerce giant JD.com, food delivery app Meituan, and ride-hailing service Didi, have been trying to persuade their users to ditch Tencent’s WeChat Pay, or Alipay for their own payment options. Short-video platforms Kuaishou and ByteDance gained licenses, a necessary step to roll out in-house payment channels, KrASIA reported in November.
Pinduoduo hasn’t yet run any campaigns to promote Duoduo Pay, unlike JD.com, Meituan, and Didi, which are luring users to select their respective payment options in the final step of a transaction, offering a discount of about RMB 5 (USD 0.75).
Currently, Pinduoduo shoppers needs to visit to the information center to activate Duoduo Pay and link a credit or debit card to their account in order to receive a Duoduo wallet. While there appears to be no incentives to switch at the moment, Pinduoduo is likely to offer them soon.
The company will be the sole sponsor of the interactive digital “red packet” event held by state broadcaster CCTV during the 2021 Spring Festival gala, state radio CRI reported in September. While there are no details available, it is possible that the lucky viewers who grab red packets will need to open a Duoduo Wallet to cash in.
Baidu, which sponsored the event during the 2019 gala, was similarly giving away RMB 900 million (USD 137 million), which could only be redeemed with a Duxiaoman wallet, operated by Baidu’s fintech arm.