WeChat: Platform for Mobile Payments
The world is constantly evolving, and people cannot imagine their lives without a phone, computer, machinery, household appliances, etc. These are innovations that have become accustomed already. Modern technologies are the main driving force of economic and social growth. They have led the international community to a new, higher stage of development. Innovations have a huge impact on the economy as they affect the quality of products. As for people’s living standards, technological progress improves the conditions of human life, such as home appliances or the Internet, which helps to expand the horizons, gain new useful information, and widen the circle of communication.
The purpose of the essay is to discuss the effect of WeChat to the society, which has become one of the most influenced applications in recent years. Thus, the essay will uncover features that differentiate this innovation from other similar ones, study the history of its development and conditions that have led to the creation of the program. Additionally, the paper will discuss major players that have participated in the project, the ways of funding, promotional activities and the impact the innovation has had on the society.
At first glance, WeChat looks like a common messenger but, in fact, it is a portal and a platform. Even more, it is a mobile operating system. There are several reasons this application is different from others. The most obvious reason is that it points to the direction of development for Facebook and other instant messengers. Another reason is that WeChat represents one of the possible ways of future development of a mobile e-commerce. Finally, WeChat is a platform and a mobile portal at the same time. To say more, the Yahoo could have been the first to offer this combination at one time.
The main difference the development of WeChat has shown is the way the entire country jumps from the era of personal computers directly to the mobile age. WeChat has been created not as a website which was later adapted for mobile platforms. It was born in the alloy with the mobile technologies. The most interesting thing about WeChat is that its average revenue per user is not less than $7, which is seven times greater than that of WhatsApp that is the largest messenger in the world (Kuo, 2014).
The mobile messenger WeChat appeared first time in January 2011. It rather quickly gained popularity among the Chinese users. A well-known WhatsApp can be considered the closest relative of WeChat if drawing parallels. However, the Chinese inventors have added many other features to their program in addition to text messages. Thus, voice messages have become a quite popular function among the Chinese users as it requires not large Internet traffic. Video and audio calls have been added in a new version. The feature ‘Moments’ or ‘Circle of friends’ represent the local Instagram where users can put their photo statuses, likes or comments. Moreover, they can follow up only those from the contact list while the likes and comments from the others do not appear. Another feature is searching people nearby, called ‘Drift bottle’, allows through a text or voice message to surf the WeChat space or check out messages from others that are chosen randomly. The integration with the QQ, some other company’s services, as well as Facebook, is another WeChat feature. Additionally, people can receive an offline message from QQ in WeChat, and many other advantages the messenger offers (Liang, 2016).
In addition to common functions such as messaging and photos, the instant messenger WeChat offers a large number of video and interactive stickers to express all sorts of emotions. The most popular memes and a personality act as the prototypes for the stickers. For example, there were relevant stickers representing persons of well-known players during the football games of the World Cup. The ability to create groups allows communicating simultaneously with many people including those who are not in the list of friends. The creator of the group only needs to invite friends to a discussion. To say more, the network stays absolutely private at the same time while users’ data is available only for those who are in the list of friends.
Not only informal conversations and flirting have flowed to WeChat but also business ones. For example, the service has started to offer the creation of corporate accounts and public groups and even embedded mobile applications directly into WeChat recently. People would like to get this chance very much. The ability to order food or a taxi directly from WeChat, as well as replenish the balance on a gadget or check the status of bank accounts has been represented shortly. The system of the WeChat interactive applications has evolved into a complete mobile payment system and a universal e-commerce platform in a mobile device. The company’s experience in electronic payment systems, which has been one of the main directions of its activity for many years, has become the driving force of the achievement. Moreover, the organization has introduced a mobile storefront recently. It is obvious that if Alibaba is a recognized leader in e-commerce among ordinary computer users, the producer company of WeChat relies on smartphone users offering the shop right in a person’s pocket these days.
There are some shortcomings in the service. For example, a user cannot send a video or audio file to a friend. However, developers continue to improve both the interface and the functionality of the application. It is possible that WeChat will expand the borders to Europe and America.
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The program was promoted under a purely Chinese brand name Weixin in the first place. The translation into English, as well as the Indonesian, Spanish, Portuguese, Thai, Vietnamese, and Russian appeared in October 2011. The brand name Weixin was replaced to WeChat, which was more understandable for international users, in April 2012. The service is available for the Android platform, iPhone, BlackBerry, Windows Phone,. and Symbian. The registration is possible in three ways, which are by binding the phone number to a mobile device, through QQ account or by using Facebook Connect (Liang, 2016).
Ma Huateng, the founder of Tencent, who has taken a nickname Pony Ma, created the QQ in 1999. He saw the rise of ICQ and looked closer to the success of WhatsApp in 2011, which has led to the creation of WeChat. There are more than half a billion users and a great potential for growth in China. For example, the Internet penetration is at about 40% of the population in China. Ma realized that he could create an analog of the popular service in the world for the people of his country.
Pony Ma brought together two competing teams of engineers and asked them to create a new product in 2008. One of the groups represented a text messenger to chat with friends and groups called Weixin two months later. The project was launched in 2011. However, Ma chose the more harmonious brand name for the Western markets, called WeChat, and translated the interface into several languages, including English, in 2012 (Bloomberg News, 2013).
The Chinese telecom company Tencent that belongs to Pony Ma encouraged the thought of the creation of the messenger as it has been Ma’s idea supported by a large potential of the Chinese market. The company’s funds and money attracted from investors like Naspers were the primary sources of funding. However, the company has managed to switch to a self-funding of the project eventually thanks to the advancement of the application features.
Tencent is headquartered in the city of Shenzen, the southern China. The logo of penguin belongs to the company’s first product QQ which is an instant messaging service. Tencent has the largest customer base in the world. Thus, the company has had millions of active users of QQ and WeChat consequently, as well as another company’s product – the QZone social network. Tencent has directed at improving the quality of human life through Internet services. Currently, the company offers Internet, mobile and telecommunications services, as well as Internet advertising as a part of the strategic goal of providing users with a single online service window. It is the leading Internet platform in China.
Tencent is committed to the strengthening of its development and innovation potential while improving its national branding for its long-term development at the same time. The organization has received patents related to technologies in such areas as instant messaging, e-commerce, online payment, search engine, information security, games, and others. The corporation invested more than 100 million CNY in the creation of Tencent Research Institute in 2007. It has a number of social welfare projects throughout China these days. The enterprise also seeks to help build a harmonious society and be a good corporate citizen.
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Naspers Ltd is a company with the largest market capitalization in Africa. Its value is about $66 billion. The shares of Naspers Limited have risen more than 500% since 2010 largely due to Tencent Inc., and this growth has helped the Naspers leader to build up a personal capital. It is the media group that operates in the area of print and electronic media and Internet technologies. In addition to the business activity in South Africa, the company conducts its operations in Asia, Europe, and North America. Naspers Ltd is the oldest South African media group that operates in 129 countries around the world. Its main interests are related to the Internet, pay TV channels and the provision of related technologies, as well as print media (England, 2015).
WeChat was created in 2011 and grew twice as fast as WhatsApp. Thus, the service attracted about 100 million users in a year and almost 300 million users in two years. Tencent that was the creator of the messenger had another successful service like ICQ called QQ. About 800 million users who had used the service were asked to switch to WeChat.
Ma graduated from the Department of Computer Science Institute in Guangzhou and worked in telecom companies after that. The Israel instant messaging chat ICQ continued to gain popularity in the world in the 90’s. Ma saw the potential of the Chinese market and offered a former classmate Zhang Zhidong to build a similar product for the Chinese. As a result, there was created OICQ Service, which was later renamed to the QQ. Ma sold 46% of the Tencent shares and attracted investment from the South African media group Naspers in 2001 (England, 2015).
The founder of WeChat developed and implemented the monetization scheme immediately. It was done through the sale of premium accounts with QQ in the first place. After that Ma licensed the messenger logo with a penguin and sold franchises for the production of toys, placing the logo on the packaging of snack, and others. After that, Tencent held an IPO on the Hong Kong Stock Exchange and attracted $200 million in 2004. The company entered the gaming market the same time. In particular, the organization released the game Tang QQ in the messenger in 2004, which resulted in earning a profit on the sale of virtual goods in games.
The company has used an aggressive advertising campaign to promote the messenger service to the Chinese by discovering the convenience of the use to the audience and, therefore, gaining a leading position among the customers’ preferences in this area. To say more, the audience of the messenger is office workers with a stable income. Thus, WeChat revenue was about $1.1 billion in 2014 while it grew by 40% in 2015. No other messenger can share the same economic results as WeChat could. According to the Nomura Research Institute, WhatsApp earned about $1 while WeChat could get on average about $7 per user. No wonder why the Wall Street Journal wrote about a $30 billion of the minimum value of WeChat when Facebook bought WhatsApp for $19 billion. As a comparison, the HSBC estimated WeChat at $83.6 billion in 2015 (Chan, 2015).
WeChat appeared when Tencent has been a public company for five years. It means that the company has been accountable to investors and has been increasing revenue all the time. Pony Ma came up with a monetization plan to help the new service not to lower the company’s financial indicators of the business. The plan was to cause people to link the account of a bank card to offer services from which it was difficult to refuse.
The company began to promote actively the messenger by launching numerous commercials and billboards informing people about the safety and convenience of the built-in payment system. Victims of fraud were promised to return the money. People believed in WeChat and began to make orders and pay for purchases via the messenger. Producers of goods and services have readily attached to the new sales channel.
Step 1. Order Placement
Step 2. Order Payment
Step 3. Paper Downloading
Red electronic envelopes E-hongbao appeared in the messenger before the Chinese New Year in 2015. There is a tradition to give money in red envelopes as a gift on this holiday in China. As a result, users sent about 8 billion electronic envelopes through WeChat in 2015, which was eight times more than the previous year (Horwitz, 2016).
Every fifth user uses the function Payments these days. Users bind a bank card to the service, participate in events, and buy products in stores through the application. It is possible to acquire movie and flight tickets, book hotels and order a taxi through WeChat. Some services are so deeply integrated into the system that users think they order the taxi literally from the messenger. Tecent earns only 20% of its revenue on advertising, unlike Facebook where advertising gives about 95% of revenue. At the same time, media companies traditionally receive income in the form of commission from a user’s transaction in China.
The messenger integrated the largest taxi service called Didi Dache into the platform in 2014. The Chinese used it about twenty thousand times, among which about six thousand people paid for the trip through the application. The function City Services was launched in 2015. It allows users to pay the electricity bills, fines and more. WeChat Secretary is the support service for expats in China that takes a 10% commission for solving problems.
Any task can be requested from this chat. People who develop the application will try to solve the problem. For example, the American startup Magic, which has attracted $40 million of investment, operates under the exact scheme (Anderson, 2014). Tencent opened WeBank in 2014. It gives credits called Weilidai in the amount of up to $32,000, including WeChat (Xiang, 2015).
People have used to compare the Chinese WeChat with WhatsApp, Line, and Telegram. However, WeChat turned into a platform for mobile payments, shopping, calling a doctor and a taxi, finding discounts and entertainment a long time ago. The messenger has attracted the attention of about 650 million active users for less than five years (Fulco, 2016). As a comparison, the main competitor WhatsApp has around 450 million users (Kuo, 2014). The Japanese Line has about 560 million users (Munford, 2016). At the same time, no one of the messengers can be compared with WeChat by the number of features as it looks more like the Facebook platform if comparing them by this feature.
The social aspect is very important in WeChat as it is not only the list of contacts from the address book or other social networks. It is also the search for new friends. WeChat has spawned many popular stickers, which have been moved to other platforms afterwards. For example, Tuzki rabbit that was included into the first set of stickers appeared on Facebook four years later and immediately went into the top ten most popular stickers. It is known that the Asian users tend to send stickers more often than those who live in the West. Some heroes become truly iconic. Thus, toys with the images of the stickers are sold in shops while books about them are also written (Chan, 2015).
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Innovations are crucial in ensuring the competitiveness of firms these days. They are something new that represents a process of change. They are created as a result of exploration and discovery and materialize scientific and practical solutions. The main feature of a technological progress is a novelty, which is rated by technical parameters, applicability, and the commercial performance.
WeChat application is a portal, a platform, and a mobile operating system. It points to the direction of development for Facebook and other instant messengers, represents one of the possible ways of future development of a mobile e-commerce. The invention of WeChat has encouraged the entire country to switch from the era of personal computers directly to the mobile age.
WeChat appeared first time in January 2011. The Chinese inventors have added many features to the messenger in addition to text messages. These are voice messages, video and audio calls, ‘Moments’ or ‘Circle of friends’, ‘Drift bottle’, and others. Tencent Inc. is considered as a creator of the messenger and the potential of the Chinese market has become the key factors contributed to the creation of the innovation. It also had another successful service like ICQ called QQ. About 800 million users who had used the service were asked to switch to WeChat. The company has used an aggressive advertising campaign to promote the messenger service to the Chinese by discovering the convenience of the use to the audience and, therefore, gaining a leading position among the customers’ preferences in this area.
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WeChat is a platform for mobile payments, shopping, calling a doctor and a taxi, finding discounts and entertainment. It places one of the main positions in people’s daily activity. It is not only the list of contacts from the address book or other social networks but also the search for new friends. WeChat has spawned many popular stickers, which have been moved to other platforms afterwards. Although different types of messengers have been invented and introduced before, WeChat is something that has been improved with additional features and customized. As a result, WeChat can be considered one of the most sophisticated innovations that play a large part of people’s live.