Red envelopes were WeChat’s secret weapon in getting users to adopt mobile payments on their messaging platform, unlocking all subsequent transaction activity across their ecosystem. But the point is that this viral growth led to other network effects in the WeChat ecosystem). (Which, to be clear, is an example of viral growth not network effects. This meme not only helped WeChat convince over half of its China users to provide payment credentials, but also allowed them to do so at a very rapid pace. That’s because they had the advantage of a cultural meme - not something commerce-based but C2C social communication based - that compelled users to bind their payment credentials to their WeChat accounts: red envelopes.
Interestingly, WeChat resolved this issue without using one of the common strategies for solving chicken-egg problems.
Users have no incentive to do so otherwise. They have to convince the user that either he/she will soon purchase again on the platform, or that there is some other immediate benefit to setting up a digital wallet with them. Unless you’re Apple with its credit-card ready iTunes, most messaging and other app platforms must work extra hard to get users to willingly share payment credentials. Similarly, for the merchant side of the marketplace, there is no incentive to dedicate marketing dollars and engineering resources to the platform in the first place if there’s not already an existing base of purchase-ready users. This is largely enabled by the sheer amount of payments credentials attached to user accounts, which significantly reduces friction in transacting across the marketplace, both online and offline.īut how did WeChat resolve their “chicken-egg problem” - getting more users or more merchants on both sides of the marketplace without there being critical mass on either side at first? For getting the user side, it is no easier to type in your payment credentials into a messaging platform (for the first time) than it is to type it into a third-party merchant form to complete a transaction - no time is saved, no friction is removed. However you label it, WeChat is an entire ecosystem in and of itself, especially as it’s used in Asia. This is especially true of messaging apps like WeChat - which, as I’ve argued before, is not just a messaging app but is actually more of a portal, a platform, and a mobile operating system.
#Tencent wechat pay 800m software#
The 7-day annualized return rate of "Licaitong" was 7.5290 percent on Jan 23, while the return rate of "Yu'E Bao" was 6.4859 percent, according to Morning Express.Network effects - where a product or service becomes more valuable to its users as more people use it - are one of the key ways software businesses maintain a better product and more defensible market position. Search engine Baidu's wealth management product "Baifa" ushered in one billion yuan on its launch day in October last year, due to the claimed eight percent annualized return rate. "Yu'E Bao", the first such wealth management tool, received 350 million yuan on June 13, 2013, the day it was rolled out by e-commerce giant Alibaba's payment platform Alipay.
#Tencent wechat pay 800m full#
The newcomer "Licaitong", which literally means a wealth management facility, serves as a spear for Internet giant Tencent, which wants to do full justice to its popular instant mess aging smartphone app, Wechat, and gain a foothold in China's increasingly competitive Internet finance sector. Tencent's Wechat users transferred more than 800 million yuan to the app's wealth management platform, "Licaitong" on Jan 22, the day it was launched, Morning Express reported Thursday. Tencent's Wechat users transferred more than 800 million yuan to the app's wealth management platform, "Lica itong" on Jan 22.