Beijing is one step closer to realizing its ambitions of «one code for all»  with the integration of Tencent and state-owned UnionPay's user identification system.

An agreement has been made by Tencent and UnionPay to integrate the QR code systems of their mobile payment platforms, according to a report from Chinese media firm «Caixin» (behind paywall), citing unnamed sources. This would effectively allow merchants to accept payments from users of WeChay Pay and UnionPay’s QuickPass by presenting both with the same scannable code whereas the current state of affairs requires two different codes.

This is especially critical for state authority as China would become one step closer to creating a single, centralized mobile payment market and realizing its ambitions of «one code for all» by the end of 2021, as per a three-year plan announced in August last year.

According to sources, Tencent and UnionPay have begun testing out their integrated QR code system on Android devices in the eastern Chinese city of Fuzhou. An agreement is also believed to have been reached by the two to work on payments based on facial recognition technology.

Breaking The Duopoly 

The agreement will effectively allow state-owned UnionPay to significantly accelerate its penetration of the market. Whilst it is the third-largest mobile payment provider in China with around 240 million users, UnionPay’s QuickPass still lags far behind WeChat Pay and Alipay, which dominate 90 percent of the market.

According to sources, Alipay is not involved in similar discussions with UnionPay due to the former’s concerns about integration.

«QuickPass could start to disrupt the duopoly of Alipay and WeChat Pay once its number of registered users reaches somewhere between 400 and 500 million,» said an unnamed UnionPay employee. «We expect it to happen sometime in 2020.»

«Without incentives for the two giants to integrate their QR codes (with competitors), it will only hurt their market share,» said an unnamed veteran industry regulator. «It will be hard to get them to go along with the policy, or at the very least they will drag their feet.»