WeChat Quietly Works on mPayment Growth 

May 19, 2015         By: Michael Foster

WeChat has swelled to 549 million MAUs, and parent company Tencent has seen its total MAUs explode by 39 percent on a year-over-year basis. As the messaging app continues to burst in popularity, especially in China, the company remains focused on expanding its mobile commerce and mobile payment offerings.

Investors were impressed with the company’s earnings results when they were released last week, causing the stock to shoot up over 4 percent in a day. It’s still below its peak price from a month ago, but is up almost tenfold from where it was over a year ago.

Part of the investor giddiness revolves around WeChat’s potential as more than just a mobile messaging platform. Already, the platform is accepted at a bunch of retailers in China, and over a billion cash gifts were exchanged through the platform for the Lunar New Year in February. All of those transactions should spell into massive revenue gains for the company, which is what investors are betting on. Already in the first three months of 2015, the company’s revenues rose 22 percent from the prior year.

But the company is looking for more growth, and it says that is coming thanks to more Chinese people using WeChat to send money—especially after testing it out for the Lunar New Year. “Driven by mobile social and video advertisements, our total advertising revenue more than doubled year-on-year. Our Red Envelope gifting initiative spurred increased adoption of our payment solutions and boosted total payment volumes. Looking ahead, we aim to bring further technology benefits to users,” Tencent CEO Ma Huateng said, adding that the firm was collaborating with a “broad range of partners” to reach that goal.

Beyond that, though, details are scarce in Tencent’s strategy to mobile payments. Whatever the firm will do, it needs to act fast and aggressively. Alipay is becoming the dominant platform for mCommerce, so WeChat will need to act fast if it wants to stop Alibaba from dominating yet another part of the Chinese internet.