WeChat red envelopes help drive online payments use in China

Enterprises and celebrities give away plenty of digital money for promotional purposes

PUBLISHED : Monday, 15 February, 2016, 7:02pm
UPDATED : Monday, 15 February, 2016, 7:02pm

WeChat, China’s predominant mobile messaging service, continues to expand the adoption of digital payment activities on the mainland, with use of its consumer-to-consumer electronic “red envelope” feature growing 903 per cent year on year this Lunar New Year.

Chinese internet giant Tencent, which operates WeChat, said on Monday there were 32.1 billion red envelopes sent out via WeChat – known as Weixin on the mainland – between February 7 and 12 to mark the Lunar New Year, up from 3.2 billion in the same period last year.

It is a tradition in Chinese communities around the world for people to exchange red envelopes on festive occasions.

That has become a huge activity on the mainland during the Spring Festival, which runs up to two weeks, with enterprises and popular entertainment celebrities joining in to give away plenty of digital money for promotional purposes.

Data from WeChat showed that 516 million users participated in exchanging electronic red envelopes over the service during the period in review. More than 92 per cent of the red envelopes were sent by internet users aged between 20 and 29.

I sent dozens of red envelopes to my friends, classmates, colleagues and relatives
He Huiyan, Guangzhou bank clerk

A Barclays report said Tencent “encouraged repeated usage of WeChat Pay and QQ Wallet by subsidising bank handling charges for consumer-to-consumer money transfers, which it offers to users largely for free”.

“I sent dozens of red envelopes to my friends, classmates, colleagues and relatives, and got more of these back that I could not remember the number,” said He Huiyan, a Guangzhou-based bank clerk.

Zhang Weiran, a Shenzhen-based administration manager, said everyone loved the electronic red envelopes because people “can go shopping and go to restaurants without using their credit card and cash”.

Gift-givers can put up to 200 yuan in each red envelope, which recipients can also use to make online payments via WeChat for booking movies, reserving air and train tickets or hailing a ride using the Didi Kuaidi mobile app.

Johnny Wong Kin-man, an equity analyst at Jefferies, said in a report that Weixin Pay now had more than 400 million users on the mainland.

WeChat’s virtual red envelopes function was launched in January 2014, with 20 million of the de facto payment vouchers sent over the first two days of the Lunar New Year later that month.

The number of red packets sent on August 20 last year during the so-called Chinese Valentine’s Day reached 1.4 billion and 2.2 billion on September 27, the Mid-Autumn Festival.

“The adoption of Weixin Pay and QQ Wallet was initially driven by consumer-to-consumer transactions, such as red envelope gifting and money transfers, and now increasingly expanded to commercial payments such as utility bills, online-to-offline [local services] and e-commerce payments,” the Barclays report said.

Alibaba, the world’s largest e-commerce services provider, also made a foray into the electronic red envelope market segment through its Alipay digital payment service.

Alipay, which has an estimated user base of 400 million, handed out red envelopes worth 800 million yuan during this year’s Spring Festival Gala, an event broadcast by China Central Television on February 7.

The number of mobile internet users in mainland China reached 620 million at the end of last year, according to the government-run China Internet Network Information Centre. The number of people who use their mobile devices to make payments increased to 358 million in the same period, it said.