The success of Wechat Pay can be attributed to its launch of “ Red Packets ” in 2014 .
12 vritti March 2018
Mobilution
However , Alipay and Wechat Pay have different success stories .
While Alipay rode on Alibaba group ’ s monopoly in e-commerce market by offering Alipay wallet to Alibaba customers , Wechat Pay took advantage of its large Chinese consumer base on the popular Wechat messaging app . Close to 75 % of the users spend at least 1 hour on Wechat app on a daily basis . This user stickiness to Wechat helped it grow very quickly in its Wechat Pay business and catch up Alipay . Today , Alipay is holding 54 % of the market share while Wechat Pay holds little above 40 %.
The success of Wechat Pay can be attributed to its launch of “ Red Packets ” in 2014 .
It capitalised on the Chinese tradition of sending gift cash to friends and relatives during the Chinese New Year . With “ Red Packets ”, the process of sending gift cash has gone digital . People simply exchanged Red Packets on Wechat Pay platform . It was received well by Chinese consumer and the number of red packets exchanged reached 1 billion by 2015 and 14.2 billion by 2017 . This explosive growth of red packets helped Wechat Pay to double its market share within 3 years . Though Alipay followed the suit later , it had already lost the first mover advantage by then .
The difference in the type of transactions that happen through both Alipay and Wechat Pay stems from the businesses they were in earlier . While Alipay records more number of high value , low volume merchant payments , Wechat Pay records more low value and high volume P2P transactions . As Wechat Pay also has “ social ” element embedded in it , it has more monthly active users (~ 700Mn ) compared to that of Alipay (~ 500Mn ).
However , there are many similarities in the offerings made by both the players . Any fintech player across the globe will definitely get something to learn from the success stories of Alipay and Wechat Pay . Firstly , both use QR code to pay or receive payments . It is an important differentiation since scanning by QR code is contactless . Unlike in card payments , where the consumer has to hand over his card to the merchant , In QR payments there is no need to hand over the card to the merchant . Moreover , it reduces the number of steps involved in paying and makes the payment experience smoother and quicker . Secondly , both the apps allow users to pay for cab booking , bike sharing , food ordering , ticket booking and bill payments . Thanks to the booming mobile payments ecosystem 40 % of the people in China carry less than $ 16 in cash any time . Most of their needs are met by simply carrying a smart phone with internet connectivity .
Alipay and Wechat Pay are also popular with Chinese tourists overseas .
They have partnered with multiple payment firms in Europe , North America , South Africa