China's mobile payment war escalates

Tencent and Alibaba are also competing in personal finance.

Yu'E Bao, an online product launched by Alipay and Tian Hong Asset Management Co Ltd, has attracted 49 million users, who have deposited over 400 million yuan in less than a year.

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Tencent and China Asset Management launched online asset management services in January. Users can deposit money and receive as high as seven percent of the annualized seven-day interest.

Prospects

Experts say the war between the two companies will have a major impact on China's mobile Internet market and usher in an era of rapid expansion, even though the industry is still in its infancy.

"The adoption of mobile payment is low and application scenarios are limited. The players are very active, but the majority of mobile payment services and products are still in the pre-commercial phase," according to a Trends and Prospects of Mobile Payment Industry in China 2012-2015 Report released by Deloitte.

Hu Yanping said the acquisitions by Tencent and Alibaba were "only the first step."

"Companies will seek ways to integrate all mobile services to make profits and even change people's lifestyle," said Hu.

But companies face certain issues and must find solutions.

Alipay's alliance with Hankyu Department Stores to offer customers a mobile payment service was halted by Taiwan's Financial Supervisory Commission for violating regulations on electronic tickets last month.

Also, both Tencent and Alibaba have been reportedly involved in user privacy leakages or illegal reselling of user information.

Internet finance is in, but is banking out?

Videographic: the battle of the taxi apps