Greetings fellow marketers and WeChat enthusiasts, today we’re going to be discussing WeChat’s main feature, the WeChat Pay, and taking a closer look at the way it functions in Mainland China and Hong Kong.
While the WeChat Pay may seem like old news to those of you who’ve been living in Mainland China for several years now, it’s steadily making a name for itself in Hong Kong and is thus far relatively unknown abroad.
Tencent have never hidden the fact that their ultimate ambition is to make WeChat a worldwide phenomenon and in many ways, Hong Kong is the ideal international market in which to test a Chinese app’s global appeal.
It therefore came as a surprise to no one when WeChat launched their Wallet feature in HK in January 2016, but things haven’t gone as smoothly as expected for Pony Ma and co.
In this week’s article, we’ll take a look at the features that WeChat Wallet provides users with, determine what differentiates WeChat Pay in Mainland China and Hong Kong, analyze the barriers that have limited the adoption of WeChat Pay in Hong Kong and ask ourselves what the future holds for WeChat Pay.
WeChat Pay: Main Features
So, look at it this way. WeChat Pay, as you may have guessed by now, is basically a digital Pay that allows you to link a credit card to your smartphone and manage all sorts of payments. It’s comprised of a series of payment features that each allow you to use your digital Pay in a specific way and was developed long before Apple Pay.
WeChat Pay is an absolute giant in the Chinese mobile payment industry and what sets it apart from international competitors such as Apple Pay is the extensive selection of features it offers. The main features are as follows:
- Quick Pay (or Money): Allows users to display a QR code that retailers can scan in order to receive a payment. This feature is only for payments to vendors and doesn’t allow a user to transfer money to another user. That’s where the aptly-named “Transfer” feature comes in.
- Transfer: As mentioned above, the “Transfer” feature allows users to transfer money from one WeChat Wallet to another. Although this feature only allows you to transfer money to users that are in your contact list, a WeChat user can otherwise scan the QR code of a user who’s not in their contact list to transfer money to a stranger (retailer or food courier for instance).
- Red Packet (or Hongbao): This feature enables WeChat users to put a specific or random amount of money into a digital envelope (red packet) and share the envelope with a group or unique user. The system randomly distributes the total amount into several different packets and users just have to click on the envelope to discover how much they’ve won.
- There are many other features including mobile top-up, wealth management, utility fee payments, charity donations, taxi and train payments (not to mention movie ticket purchasing and hotel reservation), but the aforementioned features are certainly the most popular.
If you’d never heard about WeChat Pay before today, then you’re probably amazed that mobile payments are so much more advanced and common in China than the Western world.
But even if WeChat Pay were to be launched in Western markets, would it really be as complete as it is in Mainland China? Taking a closer look at Hong Kong’s version of WeChat Pay should give us a better idea.
Differentiating WeChat Pay in China & Hong Kong
While WeChat Pay has been at the center of Mainland China’s mobile payment industry for several years already, it was only actually brought to Hong Kong in January 2016. And unfortunately for Tencent, WeChat Pay’s initial Hong Kong launch didn’t go all that well.
Now obviously, as I’ll explain in the next section on barriers to the adoption of WeChat Pay in HK, the difficulties WeChat Wallet first experienced when it landed in HK were somewhat linked to cultural differences between Mainlanders and Hong Kongers, external competition and legal matters, but WeChat Wallet’s product features, or lack thereof, certainly had a big impact on adoption rates.
After WeChat Wallet’s initial launch in HK, Hong Kong-based WeChat users could access ticket transport purchasing services and travel products just like their Mainland counterparts, but the major groundbreaking payment features we previously discussed (especially Quick Pay & Transfer) were nowhere to be seen.
Understandably, Hong Kongers were disappointed with this development and although WeChat Pay’s Hong Kong launch got a lot of exposure in local press, local users criticized the product’s inability to make easy transfers or make in-store payments.
Nowadays, WeChat Wallet’s offerings in Hong Kong have expanded and users can finally make in-store payments or transfer money to their contacts, but Mainland China users still have access to additional features, such as utility fee payments.
Last but by no means least, another aspect of WeChat Pay’s Mainland product that makes it so much more powerful than its Hong Kongese counterpart is the addition of “cross-border payments” which allow Chinese shoppers to buy goods overseas in CNY by WeChat Pay.
What barriers limit the adoption of WeChat Pay in HK?
As mentioned above, although the lack of payment features certainly didn’t help WeChat Pay to achieve a successful initial launch in HK, certain cultural, legal and economic factors also had a negative impact on the adoption of WeChat Pay in HK:
- Cultural: To start off with, one of the main factors that limited WeChat Wallet’s initial success in Hong Kong is a factor Tencent will have to deal with wherever they go; Cultural differences. While WeChat and mobile payment are second nature in Mainland China, Hong Kongers more commonly use Western social media platforms and are used to making in-store payments using their transportation card, aka the Octopus card.
- Legal: WeChat were only granted a payment license from the Hong Kong monetary authority in September 2016, 9 months after their initial launch. Without this license, WeChat were unable to provide Hong Kong users with in-store payments and user-to-user money transfers.
- Economic: As of July 2016, there were nearly 6,000 stores in Hong Kong that allowed users to pay using Alipay. On top of that, upon initially entering the market, Alipay secured a series of exclusive deals with local retailers that protected them from external competition from WeChat for instance.
What does the future hold for WeChat Pay in HK?
Despite their rocky start, WeChat have certainly improved the offerings of WeChat Pay in Hong Kong by acquiring an official payment license from the HKMA which has allowed them to provide Hong Kong users with access to the app’s most essential payment features.
As well as that, the fact that Alipay’s many exclusive deals with local HK retailers are coming to an end gives WeChat some hope in convincing additional retailers to incorporate a WeChat payment system, and this would enable more WeChat users to use their WeChat Pay around HK.
Tencent have even created several Western social media accounts through which they promote WeChat Pay (as it’s marketed over there) to Hong Kong audiences,and only several weeks ago, Tencent CEO Pony Ma declared the company would be actively seeking to team up with more HK retailers in an aim to boost local usage of the WeChat Wallet.
While WeChat Pay may not have won over Hong Kong just yet, Pony Ma’s recent remarks show that Tencent have no intention of giving up and seeing as Alibaba’s stranglehold on the local mobile payment industry is steadily loosening, Tencent have reason to be optimistic.
If Tencent manage to secure numerous deals with HK retailers and add the missing payment features OR come up with new localized payment features, WeChat Pay is sure to become an essential component of the HK digital payment sector in the near future.
Looking to gain more information on WeChat Wallet or WeChat’s expansion to Hong Kong? Here at Sekkei Studio, we’re specialized in Chinese social media marketing, WeChat store management and WeChat development, so feel free to get in touch if you need expert assistance. We’re based in Shanghai and Hong Kong, so drop a line if you require social media, marketing or SEO support outside of Mainland China!