
Money as Message: How WeChat got users to adopt payments to grow its network - runesoerensen
http://a16z.com/2016/07/24/money-as-message/
======
optforfon
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.

~~~
rahimnathwani
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.

~~~
optforfon
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

~~~
rahimnathwani
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 :)

------
soylentcola
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.

------
aianus
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.

~~~
IIAOPSW
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.

~~~
20andup
"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.

------
iamleppert
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.

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

------
rahimnathwani
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.

