(Yicai Global) Jan. 3 -- Alipay, the online payment platform operated by China's e-commerce giant Alibaba Group Holdings Ltd. [NYSE: BABA], inked a technical service contract with UniTTEC Co. [SHE:000925], a rail transit system operator, to introduce Alipay QR code scanning on some subway lines in Hangzhou, capital of East China's Zhejiang province.

Under deal signed yesterday, Alipay will pay UniTTEC CNY24.8 million (USD3.8 million) for software upgrades of the system and equipment for Line 1, Line 2 and Line 4 of Hangzhou Metro, the operator said. Alipay QR code scanning will enable such functions as payment, entrance to the subway stations, refunds and inquiries, it added.

AliPay's main rivals TenPay under Tencent Holdings Ltd. [HKG:0700] and China UnionPay Quick Pass under China UnionPay also inked similar business contracts with UniTTEC last week.

Alibaba and Tencent are vying for the mobile payment market in public transportation sector. In November 2017, Tencent took the lead, unveiling QR code payment service in Guangzhou subway where passengers can board the subway trains by scanning the QR code via its messaging app WeChat. Alibaba followed suit by consecutively introducing similar services in Shanghai, Guangzhou and Xiamen last month.