WeChat Decided to Charge Users for Sending More Than 20,000 Yuan per Month

One of the employees of Tencent Holdings Ltd. told a Chinese online portal that they have initiated a policy on October 178 to charge WeChat users 0.1 percent for transferring more than 20,000 Yuan in a month.

Tencent Holdings Ltd. is the company behind popular messaging service provider WeChat and QQ.com.

WeChat launched its red envelope app on in January 2014 and it became very popular among users during the Chinese New Year in 2015 after the company sent 500 million red envelopes to its users full of cash and an additional 3 billion virtual coupons to its users. Red envelope or Hongbao is traditionally used in Chinese culture to give gifts during festivals.

The source said that WeChat’s owner Tencent Holdings Ltd. is not looking to monetize its payment service for mobile users. The 0.1 percent fee would be charged to service bank fees, which the company has been paying on behalf of its users to banks for managing the transactions. An American business consulting firm recently reported that WeChat on average makes around $7 per user annually.

Another Chinese payment service provider, AliPay does not charge any fees to its mobile users. AliPay claims to have around 400 million active users, where WeChat claims to have over 550 million users. However, only around 400 million users on WeChat has used its built in payment features. People closed to these two companies say that WeChat may be experimenting to compete with AliPay in the future.

Industry analysts have termed the competition between WeChat and AliPay the “Red Envelope War,” as both companies are giving away millions of dollars to lure users.

Compared to AliPay’s 0.2 percent transaction fee for its website users, the proposed 0.1% fee by WeChat is still very low. Moreover, Tencent Holdings Ltd. will only charge users after a substantial threshold, which would still help maintain its competitiveness in the Chinese market.