Chinese Internet firm Tencent is getting deeper into the mobile messaging payments service.
But in terms of its payments service helping to boost its profits, that hasn’t quite met expectations.
The figures from the company’s third-quarter earnings results, revealed yesterday, showed that Tencent now has 200 million users on its payments service that’s linked to its mobile messaging app, WeChat.
While the company posted a profit, it was below expectations (though sales were above estimates). But for now, even with its WeChat users on the rise for its payments service, Tencent recognized that payments is an expensive business to be in.
“As we enrich payment scenarios and invest in initiatives to deepen users’ mobile payment habit, we are incurring significant bank handling fees on the C2C money transfers which we offer to users largely for free,” Tencent said in a statement, as reported by Fortune. “We believe such cost represents a worthwhile investment for the future given the rapid growth in users binding their bank cards to their Weixin Pay or QQ Wallet accounts, and the fast increase in monthly usage of such accounts.”
In a quarter that showed $1.2 billion in profit (RMB 7.584 billion) on a $4.2 billion revenue (RMB 26.594 billion), Tencent shared just why messaging and its payments services are becoming a greater part of its overall growth strategy — even if it takes time to get there. WeChat and Weixin (its Chinese version) together now have 650 million monthly active users across the apps. Weixin can also be used to pay bills, make P2P transfers and buy items online.
“During the third quarter of 2015, we continued to deliver solid operational growth in our core platforms. Financially, our smartphone games business accelerated growth following the implementation of a new strategy that extends our product range,” Ma Huateng, Chairman and CEO of Tencent, wrote in the prepared earnings statement. “Our online advertising revenue continued to double year-on-year. For mobile payments, over 200 million users have bound their bank cards to our QQ Wallet and Weixin Pay services, and payment volumes have sharply increased, especially for person-to-person, e-Commerce, and O2O transactions.”
Highlights for the quarter, as noted by Tencent, that relate to payments include:
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