Money as Message: How WeChat got users to adopt payments to grow its network | Hacker News Reader

Money as Message: How WeChat got users to adopt payments to grow its network

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53 pointsrunesoerensen23 comments

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Lovely article, and a great introduction to the red envelope culture.

But I think the real reason WeChat's payment system has taken off is much simpler:

- People pay for everything with cash

- Sometimes you don't bring enough cash with you

- Paying for each others' meals, sending red envelops, etc is a daily thing here

- People don't have credit cards (so that whole technology has been completely leapfrogged, and why Facebook's money transaction haven't take off and we're stuck with our crappy CC system in the US)

- Everyone and their mothers has a WeChat (I've never met anyone that doesn't... it's more ubiquitous than Facebook in the US)

So even if you're not invested in the platform you'll most likely have some money on your wechat account just as emergency cash. And it's only true that you need a bank account if you want to take money out. For instance I don't have a bank account hooked up, but I have money on mine just from times when friends wanted to comp me for a meal.

Another reason is that you get better deals paying with WeChat than cash. For example, you might get 20% off a meal if you pay with WeChat (or some other mobile payment like AliPay). This adds up very quickly.

From what I've read in a recent article, WeChat has 95% market penetration in Tier 1 cities, which is insane.

5% of people in Beijing/Shanghai/Shenzhen/Guangzhou don't have wechat? I suppose there are people who are still using QQ, but 5% seems high for wechat non users.

I'd imagine more than 5% of the population are too old/young to even use a smart phone.

Infants, people in comas, and the severely disabled probably don't have wechat

It's the existing social graph that's important.

Some other points you made aren't the main drivers of success:

People pay for everything with cash They also have bank cards and Alipay, and had them before WeChat payments existed.

Sometimes you don't bring enough cash with you Yeah, and I used to use Alipay to reimburse friends, before WeChat payments.

Paying for each others' meals WeChat doesn't help with that. It helps you pay for your own portion, as you can use WeChat to reimburse the person who paid the restaurant.

People don't have credit cards I'm not sure that _credit_ is relevant. Everyone has a chip+pin bank card (what I'd call a debit card in the UK). People have been paying with bank cards in restaurants for many years.

You made one point which is important: "Everyone and their mothers has a WeChat (I've never met anyone that doesn't... it's more ubiquitous than Facebook in the US)"

But practically everyone has an Alipay account as well. The thing is, I have 100s of contacts on WeChat (which I added for messaging) but only 10-15 on Alipay. It's the existing social graph, not just the number of users, that's important.

I think that's simplistic. All of the points are important together

Like I said, Facebook has the social graph and no one uses their payment system b/c

1 - you pay with credit cards and they're super entrenched and you don't forget your credit card like you may forget to bring enough cash

2 - at least personally... I rarely find I need to give my friends money in the US. It happens once in a while.. but not every week like in China

Sure, the social graph is not enough on its own. There's something different about China or its stage of development.

But the specific points you raised mostly don't help us understand what's going on. (1) is incorrect, (2) applies even more in the US than in China, (3) is just wrong, (4) is irrelevant as people have bank cards.

I say (3) is just wrong because: (i) WeChat doesn't facilitate paying for each others' meals; it only helps when splitting the bill, and (ii) red envelopes weren't a daily thing before WeChat. They were only for special occasions.

Anyway, I think we can agree there are multiple factors that got WeChat payments to where it is. I'm not sure I have any additional insight :)

In the country I am, everyone have cards but I have literally never seen anyone pay with one outside of bigger restaurants. I imagine China is likely to be within the category as well (loads of places to eat that does not have card readers).

In Beijing and Shanghai:

- the only restaurants I've seen that have no card readers have fewer than 8 seats

- the only restaurants I've seen which accept WeChat payments, also accept bank cards

As I understood, the WeChat payments is not what is used to pay for the meal. I assumed person A would pay for the meals of other people, then they would pay to a directly A via WeChat.

For the restaurants, admittedly I have not been in China. I live in Bangkok and here are loads of "street food" and "mom & pops" restaurants. I just assumed it was similar in China, the examples you have Beijing/Shanghai is also huge and quite modern iirc. What about other cities, outskirts or restaurants people eat for daily meals? (If that's a thing there).

The "gamification" aspect is interesting but the overall usage isn't too surprising. When Google split Pay and Wallet into two apps I kept both but whereas I stopped using Pay - the part for buying stuff at the store - for the most part (never seems to work properly on my phone) I use Wallet - the part for sending money to people - all the time.

I live with my SO and we each have various bills in our name. Rather than setting up additional profiles on each account, when a bill is due, one of us pays it and tells the other person their share. A quick email with attached funds or fire up the mobile app to send funds and the money is available immediately in the other person's Wallet and can be used for Googly stuff or transferred to their checking account without any fees.

Going out for drinks or dinner and splitting across credit cards is a pain in the ass or it turns out they only take cash and only one person has cash? One person pays, the rest of us just open the Wallet app and send them our share.

It really is useful and convenient. Honestly the only complaint I have is that they recently discontinued the physical Wallet card. That made it easy to draw off those funds at an ATM or use it as a credit card (see earlier point about Pay app not always working properly).

It's one of those things that I'd never have expected to use but it's sort of like a PayPal that doesn't terribly suck.

I have a lot of questions about payments on WeChat:

Do you need someone to verify your ID to get a WeChat account with a wallet? I don't think it would be legal to implement something like that in North America without ID checks and a money transmission license, no?

What are the fees? If non-zero, why do people prefer it to cash? If they are zero, how does WeChat make money on the feature? How is it connected to the banking system and how much does WeChat have to pay the banks for that hookup?

I honestly don't see any innovation here, the tech is dirt simple. It's just too difficult to do in the US because of the PATRIOT act, greedy banks, and overzealous AML regulations.

American in China here. I can answer this:

>Do you need someone to verify your ID to get a WeChat account with a wallet?

I set this up a while ago but I don't recall an explicit ID checking step. There might be something going on behind the scenes since your wechat account is closely tied to your phone number.

>I don't think it would be legal to implement something like that in North America without ID checks and a money transmission license, no?

Oh the irony that in this respect China is a libertarian paradise. The PRC isn't as paternalistic. They don't really make laws to stop people from taking personal risks.

>What are the fees?

Transferring to/from the bank is .05% I think. Transferring wallet to wallet is free.

If they are zero, how does WeChat make money on the feature?

I think right now the plan is still to run at break-even and/or loss until alipay dies. otoh with a sizeable amount of money sitting in their virtual wallets, tencent can effectively become a bank and do fractional reserve banking. Right now I'm just speculating.

>I honestly don't see any innovation here, the tech is dirt simple.

Often people on this forum are so concerned with the gears that they've missed the point of the car. End users don't care if the tech is literally built from sticks and stones. IMO there is a great wealth of good business ideas that require very little technical innovation. But programmers don't want to work on something which feels beneath them.

>It's just too difficult to do in the US because of the PATRIOT act, greedy banks, and overzealous AML regulations.

I agree completely. If the US keeps these arcane laws, other countries will bury us. I'm doing my part to change this situation by voting for..... oh shit.

"Often people on this forum are so concerned with the gears that they've missed the point of the car. End users don't care if the tech is literally built from sticks and stones. IMO there is a great wealth of good business ideas that require very little technical innovation. But programmers don't want to work on something which feels beneath them."

As a programmer, you just blew my mind. I completely agree.

"I honestly don't see any innovation here, the tech is dirt simple."

Well, the point is not inventing something. The point is "selling" it. WeChat might not have invented cell phone payments, but they made it ubiquitous in China.

Counterexample: EBay. What a shitty company. They always had stuff with great potential. Paypal, Skype. But they never made anything more out of it. (Skype was even a good starting point to build a social network).

Skype runs on the phone, combine Skype and Paypal on the phone to make easy and quick payments. Not it is too late. As far as I know eBay has sold Skype to MS and Paypal has been span off.

> Do you need someone to verify your ID to get a WeChat account with a wallet?

You need to enter your debit card number and your phone number that is registered with that bank. Its all connected automatically so that if you go to the bank and update your phone number, you can sign in with the new phone number on WeChat wallet the next day.

> I don't think it would be legal to implement something like that in North America without ID checks and a money transmission license

Its not hard to get when you are a big company with $$.

> What are the fees?

None. Although, I believe they started charging if you are transferring money more the some amount (can't remember, but its negligible)

> If non-zero, why do people prefer it to cash?

Convenience. So convenient. I hate going to the bank, line up and wait for an hour. You can transfer more cash with WeChat than you can at the ATM as well.

> I honestly don't see any innovation here

The innovation is simplicity and convenience. All those annoying things like paying electricity bill can all be done with a click on your phone. No more mailing or going to the convenience store to pay your bills. All done in 5 seconds.

This is a classic example of a product 10x better than the alternative. WeChat payment isn't reinventing the wheel here and I argue thats a good thing.

> The tech is dirt simple.

The tech shouldn't be simple to prevent fraud. The UX of transferring money is simple, but the backend logic should be very strict given the amount of users, a single bug can cost money.

(personal rant) The problem with people's perception of tech is that just cause the UX is simple, does not meant the programming is. It all depends on the product you are building.

Google back in 2000 is a great example. One search bar, lots of tech behind it.

"I honestly don't see any innovation here, the tech is dirt simple."

Innovation isn't just about technology. There are also innovation in the business model, service delivery, user experience, and many more. It's usually the innovation that are outside of tech that has significant impact.

See:

https://www.doblin.com/ten-types

http://www.slideshare.net/openinnovation/10-types-of-innovat...

This post just reminds me how payment systems are so tacky and awful. It's really something when you have to turn to taking over a beloved cultural tradition to trick people into giving up their bank account information to your 'platform'.

I'm sorry but there is a special place in hell reserved for the creators and marketers of these systems.

What is wrong with this system? If anything the article seems to show that it is loved my the users.

Have you used WeChat payments? Almost everyone I know here uses it, and everyone is very happy with the functionality and convenience.

Can anyone shed light on this statement? "WeChat initially launched Red Packets as a mobile web experience and it was only after they saw the dramatic uptake in 2015 that they included the feature in their native app."

AFAIK there is no mobile web version of WeChat. There's a desktop web version, but it has fewer features than the native client.

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