Market share of taxi-hailing apps in Q3 2013 Source: Analysys International Graphics: GT

Taxis are seen parked on a road near Beijing's Deshengmen on January 4. Photo: IC

Didi Dache, a Beijing-based taxi-hailing app developer and service provider, announced on Monday that it is bringing back a 10-yuan ($1.65) reward program to users who pay using Tencent's WeChat mobile instant messaging service.

This move is seen by analysts as a ramping-up of competition between Tencent and Alibaba in online to offline (O2O) services.

In this reward promotion, Didi and WeChat will jointly give out a total of 1 billion yuan to users and drivers using their services.

From January 10 to February 9, the two companies initiated a 400 million yuan incentive scheme which gave customers and drivers 10 yuan back instantly for using their services, and the incentive was then reduced to 5 yuan on February 10.

Now, the reward for using Didi and paying via WeChat has been rescaled to 10 yuan, according to an announcement by Didi.

"The three rounds of promotion can be seen as a combo," Zhang Jing, operation vice president of Didi Dache, said in an ?e-mail sent to the Global Times on Monday.

"The second round, with the reduced reward, was to see how much of our customers would choose to stay with our service," Zhang said.

"The first round promotion nurtured customers' habit of using our app and promoted the familiarity of the WeChat payment system among consumers."

The third round aims at consolidating Didi's customer base further, according to Zhang.

"It makes perfect sense for Tencent to push harder now, after its fabulous 'grabbing the red envelope' campaign during the Spring Festival holidays enlarged its customer base," Zhang Yi, CEO of Shenzhen-based market research firm iiMedia Research, told the Global Times on Monday.

Choosing a taxi-hailing app will produce an immediate impact that can be felt by customers, arouse media's interests, and consolidate its newly acquired mobile payment user base, he said.

"Tencent is making all-around entries into the real economy sectors with its newly forged mobile payment system," Yang Yang, an analyst with iResearch, told the Global Times Monday.

"Mapping, consumer service rating, and taxi-hailing services, the company does not want to lose one inch of ground in O2O services," said Yang, citing the media reports on Tencent's stake increase in Shanghai-based dianping.com, ?a ?Chinese version of Yelp, on Sunday and the company's mapping service started in 2012.

Tencent and Alibaba are two of the main players in online retailing and payment in the nation, competing with each other fiercely in instant messaging and the Internet finance sector.

Their rivalry seems to be heating up.

On January 20, Tencent's main rival, Alibaba Group, countered Tencent's cooperation with Didi by joining hands with taxi-hailing app Kuaidi Dache, offering consumers and drivers 10 yuan back if they use Alibaba's mobile payment service Alipay Wallet to pay for taxi fees.

In an e-mail sent to the Global Times on Monday, Alipay's spokesman Zhang Dao?sheng said that Kuaidi and Alibaba are now further upgrading its incentive scheme for customers using the Kuaidi app and Alibaba's mobile payment service Alipay Wallet to pay for taxi fees.

According to the new scheme, customers using Kuaidi and the Alibaba service will get 11 yuan back, 1 yuan more than the amount offered by Didi and Tencent.

"I would love to see the competition among taxi-hailing apps heat up as it gives me more choices and benefits," a 32-year-old paralegal surnamed Zhu told the Global Times on Monday via telephone.