Hot competition

Alibaba is banking on Alipay Wallet's role in app transactions to make it the center of Chinese people's financial lives, from holding their savings to buying a can of soda.

That explains the rationale for both Alibaba and its rival Tencent Holdings Ltd, which is heavily subsidizing a rival app.

With an easy name to remember, Didi Dache (Honk, Honk, Catch a Cab) has rolled out similar offerings to lure users, most of whom are using Tencent's popular mobile chat app WeChat.

Refunds are given to users' Tenpay account, the equivalent of Alipay in Tencent's empire.

Kuaidi and Didi have taken the lead in China's nascent yet fast-growing taxi-hailing sector, with a combined 80 percent market share, IT consultancy iResearch estimated in November.

Kuaidi announced unexpectedly on Monday that it will halve subsidies on the customer end to 5 yuan per ride for up to three rides per day.

It's unrealistic to expect permanent subsidies, but the whole idea of a rebate is to nurture the market and brand awareness, said Zhang Jing, operating vice-president of Didi.

"More than 40 million rides were booked via the app in the first month of the promotion, with 68 percent of payments completed via Tenpay. To that end, we have achieved our goal," he noted.

Kuaidi, for its part, is stressing "sustainable commitments" to customers, according to a statement from Alibaba.

Company statistics suggest that daily orders peaked at 1.28 million, while 600,000 transactions were carried out daily through Alipay Wallet.

China's hailing apps have some unique features that distinguish them from those overseas.

For one thing, there's the business model. Profitability isn't the top priority for domestic companies, at least for now, while app developers in the West charge a commission for connecting drivers and passengers.

For instance, San Francisco-based car-hailing operator Uber charges a base fee as well as rates based on time and distance. Those rates vary from city to city.

Another feature of the Chinese apps is that passengers can add "tips" to entice drivers.

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