![]() WeBank could be the topic of another issue, but TL/DR is that WeBank is a Chinese neobank whose core revenue driver is acting as a broker connecting banks (lenders) with consumers and small businesses (borrowers) and taking a fee in the middle. WeChat Pay also has a deep integration with “WeBank”, one of China’s first ‘neobanks’. China is the country with the highest rate of digital payments and its thanks to these two companies. One of the biggest contributions that WeChat Pay (and AliPay – but this issue isn’t about them!) has made has been bringing an entire country online to digital payments. As of November 2019, it looks like WeChat’s product was managing about $112 billion and has been competing against AliPay’s product by offering higher interest rates. In the fall of 2018, Tencent and WeChat launched their own similar product, LingQianTong (or “Mini Fund”). By March 2019, the Tianhong Yu’e Bao fund (which translates to “leftover treasure”) had about 588 million clients, 1/3 of the Chinese population. AliPay launched the Tianhong Yu’e Bao Money Market Fund (which basically amounted to a high-yield checking account) for users in 2013 and by 2017, it was the largest money market fund in the world, surpassing offerings from JP Morgan, Fidelity, and Vanguard. To illustrate how big the Chinese FinTech market is, look no further than WeChat Pay’s most direct competitor, AliPay by Ant Financial (Alibaba). WalkTheChat estimates what the WeChat Pay growth looks like over time:īesides the QR code payments that WeChat is well known for, they also offer FinTech products that include wealth management, consumer lending, insurance, and remittances, among many others. Six years later, in 2019, FinTech offerings drove $11.9 billion (22% of) Tencent’s total revenue. They don’t break out payments from “FinTech” and “business services” in their financial statements, but I am going to imagine they have a set up like Apple Wallet where they take a small fee on transactions (e.g., 0.15%) that otherwise would have gone to the banks/card issuers. It’s actually a bit fuzzy where Tencent makes money on WeChat Pay. One way to think about WeChat mini-programs and their apps is that they’re storefronts built on top of a payment app, rather than a payment experience build into a website. In Q4 2019, WeChat pay was doing more than 1 billion commercial transactions/day across its 800 million monthly active users and 50 million merchants. ![]() In that same update (WeChat Version 5.0) WeChat added payments and the ability to buy stickers (one of their first monetization attempts). In my last post, I proposed that WeChat began morphing into a true “Super App” at the point where it added official accounts (a pre-cursor for mini-programs) in May of 2013. This is part of a larger thesis on Super Apps that I’ll talk about in my next post. Any move to reduce the convenience of WeChat risks weakening the attractiveness of its current tightly integrated feature set.To be a truly generalizable Super App, I believe you need to own your user’s wallet. The app is used by a billion-plus people and relies on the backend support from a variety of different divisions. SEE ALSO: WeChat Pay Score Launches Immediate Delivery Serviceįor Tencent, including WeChat Pay in the financial entity adds new uncertainty to the restructuring of the payment business since it is an integral feature of the company’s main app, WeChat. The new requirement will allow the payment service and the large amount of data it generates every day to be supervised by new regulators such as the Central Bank of China. Moreover, regulators also believe that Tencent ’s current payments license owned by its TenPay unit, the back-end provider of wallet services on WeChat and QQ, is insufficient to cover WeChat Pay’s services. The potential move would present a fresh hurdle for Tencent, which along with other internet firms, was told in 2021 to cordon off financial services from its main business. Bloomberg’s source said Tencent faces requirements similar to those of Ant Group to integrate its banking, securities, insurance and credit scoring services into a financial holding company, regulated like traditional banks. WeChat Pay handles several billions of dollars worth of business every day, but it is a trading platform, not a lender. The move is a part of an overhaul that may necessitate a new license for the ubiquitous mobile payments service, Bloomberg reported on Friday, citing people familiar with the matter. ![]() Chinese authorities are considering requiring Tencent to include its WeChat Pay system in a newly created financial holding company.
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