Payments

Tencent Uses All the Tricks up Its Sleeve to Control the Payment Ecosystem

MEDICI

Tencent, a giant in online gaming and social networks in China, is amplifying its e-commerce capabilities to dominate the China’s fast-growing market for online shopping. Tencent operates some of the most popular online services for China’s PC and mobile users—such as its QQ and WeChat messaging services—with more than millions of users. Analysts say Tencent has taken advantage of the vast user base for its online platform to offer lucrative services such as e-commerce.

Tencent aims to create a socializing and shopping universe for its users. So the company is investing in retailers and service providers and connecting with hundreds of potential customers on WeChat. The main goal of Tencent is to control the payment ecosystem. Tencent’s WeChat has more than half million users in China and this is what makes WeChat different from other social media networks. Using WeChat, people can buy things from Tencent’s partner companies using their own payment system called Tenpay. According to analysts, Tencent does not take stakes in the companies it funds but expect those startups to use Tenpay. Tencent’s WeChat allows users to transfer money to their contacts, reserve taxis, shop online, etc. It is rumored that around 200 million bank accounts were linked to WeChat over the 2015 Lunar New Year holidays. To increase the user base in the payment ecosystem, the company is investing in startups. Last year, the company took part in 48 deals worth $6 billion.

Some of the Tencent’s recent investments are JD.com, Dianping, online fashion retailer Koudai, etc. The main aim is to convert the existing user base into a payment user base. Tencent recently announced a joint venture with Baidu (China’s largest search engine) and Wanda (the country’s biggest property developer) to transform China’s retail markets, allowing customers to order items online and pick them up from nearby stores.

The LTP View: Connecting social media, e-commerce and the payment ecosystem is a great move. It increases the user base for the Tencent’s payment platform as WeChat is very popular in China with 300 million+ subscribers. In addition, it’s great to shop and pay while you're chatting. This is one of the first kinds of immersive payments that’s been integrated quite well into an already habitual process like instant messaging.

MEDICI Team

MEDICI

MEDICI Team is a group of content writers, bloggers, journalists, researchers, and editors from the MEDICI team who collaborate to create FinTech insights.

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