Tencent wants to cash in on WeChat popularity

The Shenzhen-based internet company is hoping to expand payment systems into wireless platforms that enjoy high popularity

PUBLISHED : Thursday, 04 July, 2013, 12:00am
UPDATED : Thursday, 04 July, 2013, 3:48am

Tencent, the mainland's largest listed internet firm, is poised to introduce payment systems in WeChat and its other wireless services to transform popular free-to-use platforms into revenue-generating businesses.

Martin Lau Chi-ping, the president of Tencent, announced this plan yesterday at the Shenzhen-based company's developer conference in Beijing.

"We will extend our payment system to our wireless platforms in the future," Lau said. "Some applications are free, but since they have very high circulation, we can commercialise them by putting advertisements."

He said WeChat, Tencent's popular social communications application for users of smartphones and media tablets, would start running a payment system on version 5.0, which is being tested. The service, which competes against similar platforms such as WhatsApp and Line, is on version 4.5.

Payment transactions on WeChat could involve a company such as McDonald's, one of the first big merchants to open an online channel in the platform. Tencent described a scenario in which followers of the fast-food chain may buy a 3 yuan (HK$3.80) tea discount coupon through WeChat.

It was unclear whether WeChat would also carry advertising. Lau had previously said that mobile phone screens were small for advertisements and that providing these could eat up a lot of bandwidth.

WeChat, known as Weixin on the mainland, has more than 300 million registered domestic users and recently surpassed 70 million users internationally.

Tencent also announced that WeChat had consistently been "the most downloaded mobile social application in numerous countries, including in India, Malaysia, Mexico and the Philippines".

In a research report last month, Barclays said: "We believe Tencent is best positioned to leverage traffic shifting from PC gaming to mobile gaming."

It said Tencent's portfolio of wireless platforms - including Wireless QQ, WeChat, Mobile Qzone and Mobile Browser - would allow the company "to capture mobile users and cross-sell its products".

WeChat was also forecast to reach more than 400 million users by the end of this year.

Lau said Tencent targeted about 3 billion yuan in shared revenue this year with developers, which are encouraged to build new apps on its various wireless platforms.

In a report in March by JP Morgan, Tencent was forecast to achieve solid revenue growth this year to 57 billion yuan from about 44 billion yuan last year, bolstered by the commercialisation of WeChat and its other wireless services.

Tencent shares fell 0.99 per cent to HK$298.80 yesterday.