Tencent Holding Limited is one of the big giants of China, who have been competing with developed players like Google, Apple, Facebook, Alibaba. WeChat, product of Tencent provides social network timeline, branded accounts, shopping, games and more apart from text messaging, voice and video calling. Payment is another area and over the past year, Tencent has put considerable focus into its China-based service, WeChatPay, which can be used to transfer money between WeChat users (peer-to-peer) and make payments online and with partaking offline retailers.

Tencent’s fourth quarterly earnings report showed overall revenue grew at its quickest rate in three years. Among the other items unveiled, WeChat is now up to 697 million active users worldwide each month having added close to 200 million to that figure over the past year.

Tencent also revealed that it banked over RMB300 million ($46 million) from bank transfer fees from WeChatPay, almost all of which came from China. The company took 0.1 percent on transactions, which means the service saw close to $50 billion in bank transfers that month. At that same pace, that would mean close to $550 billion in payments processed per year — that’s close to double the $282 billion that PayPal processes a year.

This impressive figure is a growing threat for Alibaba’s affiliate, Alipay. Alipay had record payment $519 billion in 2013 and since then it has not revealed its figure but as anticipated, it must be quite high now, as number of smartphone user has spread in China.

To gain more traction, Tencent has dropped fees for peer-to-peer transactions, as expected; it would help WeChat in making it the standard for moving money between friends. Another strategy to motivate consumers to keep their funds in WeChat Wallets itself rather than transferring it to bank is by charging users a fee during bank transaction.

WeChat Expanding Services to Incite the Users and Partnering with Giants

Because of subsidizing merchants and other operational costs, President Martin Lau doubted WeChatPay to become a profitable business. But, the real value, Lau argued is that WeChatPay “will benefit our overall ecosystem,” such as empowering future advertisements with one-click purchasing from users, and synergies with financial services like Tencent’s wealth management fund and online bank.

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