Tencent Holdings’ mobile messaging app WeChat will soon be charging its 600 million+ users a fee for its payments and money transfer services.
While Tencent plans on charging users 0.1 percent on spending and transfers exceeding 20,000 yuan ($3,150) per month, it will keep small amount transfers free for now, an anonymous Tencent employee familiar with the matter told Caixin Online.
According to the source, the company doesn’t plan on diverting the revenue to its coffers but is in fact only implementing the fee to cover for transactional charges, which have so far been absorbed by the company, imposed by banks.
The change in policy, which was reportedly introduced by the Internet giant on Oct. 17, comes just a little ahead of the time China sees a surge in the exchange of virtual red envelopes used by consumers to send money as gifts to family and friends for the Chinese New Year. However, the source told Caixin, the company does not plan on monetizing the profit-making opportunity and would instead keep it free.
Currently, Tencent earns about $7 per year from each of its WeChat users, according to Activate Inc., a consulting company, Caixin reported. The app’s payment business faces stiff competition from Alibaba’s Alipay, which does not charge its users except when they are making payments using its website, where it charges them 0.2 percent on money transfers.
Last month, Tencent announced plans to support P2P loans on its platform with a $31,500 transfer limit on personal loans.
The launch of new initiatives comes as the company works on expanding its presence beyond China. The company recently partnered with the Japanese department store chain Daimaru Matsuzakaya to offer mobile payment options to Chinese tourists as of Sept. 30.
“Internet finance is still at its early stage, and the regulatory framework is still evolving,” said Cynthia Meng, a financial analyst at Jefferies, in an interview with The Wall Street Journal. “Between WeChat and Mobile QQ, Tencent covers most of China’s smartphone users. This is the beginning of Internet finance.”
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