WeChat is taking on more than emoticons. China’s most popular mobile messaging app will soon become a financial service platform with the implementation of a savings investment system.
The messaging app, a service from Internet giant Tencent (HKG:0700), has found success in China and abroad. WeChat will implement the investment system in mid-December, allowing users to link their bank accounts to their WeChat accounts. Users will be able to deposit money through TenPay, Tencent’s payment system, the South China Morning Post reported on Monday.
After depositing money, users can then use the WeChat software to manage their funds, make purchases at participating retailers and automatically recharge their mobile phone plans via the same deposit account. The new savings platform complements WeChat’s existing online payment capabilities, comparable to other e-wallet services like Paypal.
Tencent’s major competitors, Baidu Inc. (Nasdaq:BIDU) and Alibaba, both have similar financial service platforms, but WeChat enjoys a big advantage in its 300 million active users.
“Tencent’s advantage is the sheer number of WeChat users that currently exist,” said Yi Huan Huan, deputy director of Hongyuan Securities, a financial services firm based in Beijing. “Baidu’s services receive a lot of traffic, and Alibaba already has the advantage of a large capital flow.
In the short term, WeChat’s financial services may not have a huge impact on Baidu and Alibaba’s businesses, but in the long run, the messaging application has the potential to grow, Yi added.
WeChat recently showed off that potential to be more than just a messaging service on Singles’ Day, one of the biggest online shopping days in China. More than 80,000 orders were placed via WeChat, which allows users to make fast purchases with their smart phones. Along with Tencent’s 51buy website, which offered extensive sales, Singles’ Day brought in over 500 million yuan ($82 million) in profit to Tencent this year, the South China Morning Post reported.
Tencent has been expanding WeChat’s capabilities aggressively over the past year, in order to transform the popular application to “beyond a simple chatting app and enrich the user experience by becoming a truly mobile social platform,” said Poshu Yeung, vice president of Tencent’s international business group.