In this article, we will look into:
- What is WeChat payment
- How can foreigners apply for WeChat payment (for individual) click here
- How can you change the bank card linked with WeChat payment (for individual) click here
- How to apply for WeChat payment (for companies) click here
- How to set-up WeChat cross-border payment (for companies)
- 3 case studies of WeChat cross-border payment click here
- Long-term prospects for WeChat payment
What is WeChat payment?
WeChat payment is a payment solution completely integrated inside the social and messaging application of Tencent: WeChat. It appears in the “Wallet” section of the application.
Through the wallet section and the integrated browser of WeChat, users can perform a variety of transactions using WeChat Pay, including and not limited to:
- Transferring money to friends (especially as “red envelopes” shared during Chinese festivals)
- Performing transactions on e-commerce websites
- Topping up their mobile
- Investment in wealth management funds
- Paying for water and electricity bills
- Order and pay for a cab
- Purchase a train or flight ticket
- Book a night in a hotel
- Purchase movie tickets
- And much more…
These transactions are meant to be a future money-maker for Tencent. It is good to keep in mind that Tencent is very different from its Western competitor Facebook: while Facebook makes 95% of its revenue from advertising, the figure is only 19% for Tencent.
Tencent actually makes most of its money through value-added services. And WeChat pay will pay a central role in this service strategy.
How do foreigners create WeChat payment account (for individual)?
Living in China without WeChat payment or Alipay is like living without a credit card. How can foreigners open WeChat payment account?
- WeChat account
- A Chinese bank card
- Phone that linked with your bank card
Steps 1: find the WeChat Wallet card
Go to your WeChat and click on Me/Wallet/Cards. This will take you to a section to add a Chinese bank card.
Note if you don’t see Wallet in your WeChat, it is because you download the international version of WeChat. Here is a trick to see the WeChat Wallet on the international version of WeChat.
You can click on Setting/General/Language to change the WeChat langurage to Chinese.
This will activate your WeChat Wallet. You can then change your langurage back to English and WeChat Wallet in stays.
Step 2: Add a bank card
Now you can add a credit or debt card to link with your WeChat Wallet.
You will need a Chinese bank card.
*Important: make sure you use the exact name you use that matches with the name linked with your bank card. The name field is also case sensitive.
Step 3: done!
Now you have successfully linked your bank card with WeChat!
Now enjoy shopping 🙂
How do I change the bank that’s linked with the WeChat Wallet (for individual)?
Some people might link a friend’s bank card with WeChat Wallet and later wants to change it, you may bump into a lot of error messages if the two bank cards have different names. Here is how you can change your bank card:
- You can got to Wallet/Card to delete the previous card
- In the add a card page, click on the green information sign to change your name
- Before you click on change names, make sure your WeChat Wallet have 0 balance
- Make sure your WeChat payment account are not linked with a third party company for automatic payment (such as Uber, Didi).
- If you see an error message and is not sure what it means, it could possibly be the WeChat mess up the English translation. In the case, you should switch the langurage back to Chinese and see that it says.
- Then you can proceed to the adding a bank card section (see section above)
How to apply for WeChat payment (as a company)?
There are two main cases when it comes to applying for WeChat payment:
- You already have a company in mainland China
- You have a company outside China
If you don’t have a company registered anywhere, then you won’t be eligible.
Case 1: you already have a company registered in mainland China
If you already have a company registered in mainland China, you will first have to register a local WeChat Official Account (Service account – 服务号). You can do so on the official WeChat Official account page:
In order to create and verify your account, you will need the following documents and information:
- Company registration number (企业注册号)
- A scanned of your business license, with company stamp (执照扫描盖章)
- Account operator name (must be a Chinese national with a WeChat Payment account)
- Account operator’s phone number:
- Account operator’s ID number and ID type
- Official Account name (can only contain Chinese characters, numbers, letters with no space)
- Official Account short description
- WeChat Official account ID (users can use this id to search for the account, the ID can’t contain spaces)
- Last three months of telephone bill of the account operator
- Front and back photocopy of the account operator’s photo ID
- Office landline phone number
- Company banking account
- Bank name
- Bank address
When you apply, make sure to pick Service Account (服务号) as the type of account.
Once your official account is scanned and verified, you will be able to apply to WeChat payment using the menu on the left-hand side of the account.
You will then have to follow a process similar to the account creation process in order to get WeChat Payment enabled.
Tencent charges a commission of about 0.6% on transactions made through WeChat payment in China.
Case 2: you do not have a company registered in mainland China
If you do not have a registered company in mainland China, you will have to opt in for another solution in order to set up your WeChat payment account: WeChat cross-border payment.
You can handle your application for WeChat cross-border payment on TenPay’s website:
Click on the self-application menu.
There are several type of WeChat payment applications:
- App Payment is meant for Android / iOS APP wanting to include WeChat as a payment option
- WeChat Offline Payment is meant for brick-and-mortar stores wanting to add WeChat payment via QR codes
- Official Account Payment is used in order to embed WeChat payment within your mobile website (this is the most common use-case)
Note that the application requests your “Official Account APPID” which is an unique identifier for a WeChat Official Account. If you are unsure how to create an Official Account for your oversea business, feel free to reach out to us.
In terms of fees being charges, there are two main constraints set by Tencent:
- A 3% commission on all transactions
- $5,000 USD settlement amount (which means the money will be transferred to your bank account each time you reach $5,000 USD of sales
These are very similar to the terms from Alipay vs. WeChat Payment (cross-border payment). You can see a detailed comparison in the table below.
How to set-up WeChat cross-border payment
- Setting up WeChat cross-border payments on a Magento website
There are several APP’s on Magento Connect enabling you to set-up WeChat payment on your website:
- WeChat Payment Method
- WeChat Payment (高级微信支付)
- Wechat Payment / 微信支付
- WeChat Cross-border Online Payment
However these extensions have a few drawbacks:
- Low popularity, most of them with 0 reviews
- Most of them integrate the native version of WeChat cross-border payments, which is difficult to apply for (about 3 months) and has some practical limitations (such as the inability to proceed with refunds after the day of the transaction)
There are local representatives of Tencent in various regions (Asia, Europe, U.S, Australia, New Zealand, etc.) who can help you set up accounts faster and with more advanced features. Reach out to us (email@example.com) for advice on finding the appropriate supplier in your case
- Setting up WeChat cross-border payment with Shopify
It is unfortunately impossible to set-up WeChat cross-border payment directly with Shopify. Shopify limits the number of payment methods which can be used, and as of March 2017, Shopify isn’t on the list (although Alipay Global is).
The best solution if you have a Shopify store is to use a third party WeChat shop solution with an ability to import your store to WeChat, and host your WeChat store on a separate sub-domain (you can do that with WalktheChat cross-border shop builder)
- Setting up WeChat cross-border payment with WooCommerce
There is as of now no plug-in for integration of WeChat Cross-border Payment into WooCommerce. There is however a plugin enabling a local implementation of WeChat Payment (requires a local Chinese company registered in mainland China)
For a cross-border implementation, feel free to reach out for advice.
- Setting up WeChat cross-border payment for custom websites
Custom implementations are more complex as WeChat Cross-border Payment requires more effort as the WeChat payment API is complex and documentation exists only in Chinese (you can find it here)
WalktheChat provides a SDK to simplify the integration of WeChat cross-border payment. If you think that could be useful, reach out via firstname.lastname@example.org
How well is WeChat payment doing?
WeChat payment, is doing, in a couple of words: pretty good.
The function has been popularized by Tencent masterful marketing coup: enabling Chinese users to exchange money via digital red envelopes, a tradition during the Chinese New Year festival. As a consequence of this strategy, as of today, the most popular use of WeChat payment is still to send red envelopes and exchange money with friends.
Compared to its competitor Alipay, WeChat Payment is however more focused on smaller transaction amounts: only about 20% of WeChat Pay transactions exceed RMB 1,000
Most importantly, WeChat payment is seeing an explosive growth: according to a report by the consulting agency McKinsey percentage of users having used the feature doubled between 2015 and Q1 2016.
The report also showed that the sources of traffic driving to e-commerce purchase via WeChat payment were diverse: more or less evenly split between traffic coming from friends, from WeChat Public Accounts, from JingDong (Tencent has a 15% stake in JD) and from other applications.
Another key factor which influences adoption of WeChat Payment is the support from online merchants. Many WeChat Official Accounts (the equivalent of Facebook Pages for Wechat) started linking their “blogs” with WeChat stores in order to generate sales from e-commerce.
The current average of WeChat accounts being linked with a WeChat store (among top accounts is around 25%). Of course these statistics vary depending on the industry. Accounts in the childcare, beauty and travel industries tend to have a higher penetration of WeChat shops (around 30%) while accounts discussing relationship-related topics have a much smaller number of e-commerce implementations.
Because WeChat e-commerce is often related with endorsement from Key Opinion Leaders (due to the social nature of the application), these WeChat store are a heavy driver for the widespread adoption of WeChat Payment.
These WeChat shops are, for the most part, created using third party SaaS platforms (such as Weidian, Youzan or WalktheChat). Such platforms are local equivalents of Shopify which enable to easily set up a store and create a link between social and e-commerce.
The number of accounts having developed their own website is comparatively small, with only 24% of them having developed their own customized WeChat shop.
Why online payment is a terrific market
First thing to understand is: payments are important. And “who will win the payment fight” might very well be a life-or-death question for Alibaba and Tencent.
To take a point of comparison: PayPal represents as of today about 44% of Ebay’s revenues. Moreover, this proportion keeps growing over time since 2002 (PayPal is now going to be taken out off eBay in 2015, but that’s another story)
The reason is simple: e-commerce markets fight for lower and lower margins. In such a commoditised market, payment is the one part of the business where margins get (less) compressed.
Compared with Alipay: Alipay’s revenues reached RMB 13.8 billion in 2013, accounting for 29% of Alibaba’s revenue. Moreover, Alipay’s margin was about 30%, higher than PayPal’s 24%.
The situation is therefore clear: payment is a major path for growth and there is still much room for expansion.
Both for Tencent and for Alibaba, online payments will be a key source of revenue for the years to come. Online payments are however a market where monopolies tend to appear as users don’t like multiplying the number of services they use. For at least one of the players involved, getting online payments right might be a matter of life and death.