(Yicai) Sept. 4 -- Chinese e-commerce giant Alibaba Group Holding will add internet behemoth Tencent Holdings’ e-wallet WeChat Pay on its two e-retail platforms, Taobao and Tmall, in a landmark move that brings the once sparring rivals closer.

“We have always been open to collaborations, and have actively explored inter-operability and tie-ups with our peers. We constantly strive to enhance user experience by making shopping more convenient, enjoyable and efficient,” Taobao and Tmall told Yicai today.

Enabling WeChat Pay on Taobao is expected to add several millions of daily active users, 36Kr reported, citing an analyst at an investment bank.

WeChat Pay is the preferred payment method in lower-tier markets and will help Taobao and Tmall penetrate smaller cities, analysts said. Some 83 percent of users at county-level prefer to use WeChat Pay and in towns and villages it is at 78 percent, according to 2020 data. In the big cities it is just 76 percent.

Tests over the past half year have shown that WeChat Pay integration is effective in helping Taobao acquire users in lower-tier cities, a person close to the company said.

Taobao secretly started to make preparations to add WeChat Pay half a year ago and began to make it available to a small number of users, tech media outlet 36Kr reported today.

And Tencent will gain a new source of income, analysts said. Taobao will pay a fee to the Shenzhen-based company when its users use WeChat Pay.

Not only will this help boost sales, but enabling WeChat will allow merchants to standardize data from different payment channels, a garment vendor on Tmall said. It will enable merchants to conduct more targeted market analysis and user profiling to optimize their strategies.

Vendors are likely to spend more on marketing and promotion on WeChat with the Taobao-WeChat Pay tie-up, analysts said.

The two companies have been arch rivals for many years and banned the use of the other’s services and products on their platforms from 2008 to 2021. After the Ministry of Industry and Information Technology called for better connectivity between the big internet platforms from 2021, Tencent started to ease links, allowing users to be redirected to Taobao and Tmall from links in Weixin Channels, WeChat Moments and WeChat Mini App ads.

Editor: Kim Taylor