Tencent’s WeChat Payments Skyrocket as China’s Messaging App Grows to 700M Active Users

The biggest social network in China registered a 22% increase in its revenues in the fourth quarter of 2015, showing an impressive growth pace.

Tencent, the company behind WeChat, announced impressive end of year financials that included its highest quarterly revenue growth for three years. Photo: Sinchen.Lin/Flickr

Tencent, the company behind WeChat, announced impressive end of year financials that included its highest quarterly revenue growth for three years. Photo: Sinchen.Lin/Flickr

Tencent Holdings Ltd, the developer of WeChat messaging app, has unveiled its revenues grew at the highest rate within three years. According to the Q4 2015 financial results, published by the company on Thursday, WeChat added about 200 million monthly active users last year, what brought the total number of users to almost 700 people.

Tencent has also disclosed that it pays banks a 0.1% fee for each transaction conducted via the WeChat Payment service. In January, it spent more than 300 million yuan for paying these fees, what means it processed over 300 billion yuan (around $46 billion) in transactions during the month. And this not taking into account non-P2P transactions, such as restaurants, online media and taxis.

Tencent’s net profits, meantime, totaled 28.81 billion yuan in 2015, with the growth being attributed to the rising revenues from advertising and online games.

As Reuters wrote, Tencent will likely record 3.6 trillion yuan ($556 billion) in WeChat Payment transactions this year, in case the current growth rate will continue. In comparison, PayPal’s transactions amounted to $282 billion in 2015.

Last year, Tencent launched WeChat Wallet service in South Africa, what marks the first international expansion. The option allows users to send funds to each other and make payments at more than 24,000 merchants in the country.

Despite the rapid revenue growth, Tencent may soon face some problems with retaining its customers. According to the article by The Wall Street Journal, some of the company’s users did not like its decision to integrate advertisement in WeChat.

One of them, named Ren, told WSJ that there is no choice but to use the app, because everyone is using it. “There is no escape from WeChat. My friends and business contacts are all using it,” she said.

Overall, the online payments industry in China is rapidly growing now. In 2013, WeChat Payment’s main competitor, Alipay, crossed $519 billion in the total payment volume. Still, the figure may be higher now, as the company, controlled by Alibaba Group, did not reveal its annual earnings since 2013.

Before the launch of WeChat Payment, Alipay was the leading mobile payments app in the country. The companies, however, are now facing competition from Apple, which has recently entered the Chinese market.

US tech giant partnered with bank company UnionPay to make its payment app, Apple Pay, available for customers in China. According to market experts, the service is likely to reach wide adoption, given the high sales volumes of Apple devices in the country.

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