The red envelope craze cannot burn the future of WeChat payment

On New Year's Eve, the total number of red envelopes sent and received was 1.01 billion, 200 times that of last year. This achievement would make anyone excited. Objectively speaking, it is WeChat's efforts that have made Internet red envelopes a common phenomenon during the Spring Festival, from its successful sneak attack last year to becoming the recognized winner in the red envelope war this year.

Therefore, in the eyes of many people, WeChat has taken all the benefits brought by red envelopes, and there are constant calls for WeChat Pay to challenge Alipay. However, I think this statement is too optimistic. WeChat red envelopes are essentially just a game. They can indeed drive the growth of WeChat Pay card binding volume in a short period of time, but the dazzling Spring Festival data is like a false fire and is not enough to make WeChat Pay dominate the mobile payment field.

The market share has not improved. Where have all the people who grabbed the red envelopes gone?

During the 2014 Spring Festival, WeChat red envelopes came out of nowhere and even surprised Jack Ma. Since then, WeChat has struck while the iron is hot and launched a red envelope war in areas such as taxi-hailing. However, changes in the mobile payment market last year showed that WeChat red envelopes did not bring a breakthrough to Tenpay in the field of mobile payments.

According to iResearch's statistics, in the first quarter of last year, Alipay's share of the mobile payment market was 76.2%, and Tenpay's was 12.9%, 5.3% ahead of the third place. By Q3, Alipay's market share grew to 82.6%, while Tenpay's market share fell to 10%, leading the third place by 5.6%. After a year of crazy "burning money" in multiple fields such as taxi-hailing, e-commerce, and life services, Tenpay's market share has decreased instead of increased, and its advantage over the third place has not expanded significantly.

The reason is that WeChat red envelopes are just a game based on social relationships and are far from payment. Giving red envelopes is a very auspicious thing in China. It is an activity that the public loves and is willing to participate in, especially during festive occasions such as the Spring Festival. WeChat itself is a social network with strong relationships, and it is easy for friends to play games together. Through this gaming method, it is not difficult to rapidly increase the user base of WeChat Pay in a short period of time. In fact, there are many examples like this, such as the Moman Camera, which once dominated the circle of friends. But users are just playing around, and after playing, they will continue to do what they are supposed to do. As some people joked, users are busy transferring the money they snatched from WeChat red envelopes to Alipay.

The biggest problem facing WeChat Pay is the retention and conversion rate of card-bound users. Because payment requires a scenario, and this is precisely WeChat’s biggest weakness. As iResearch pointed out in one of its reports, the core problem that mobile payment may face is the expansion of scenarios, so "it is an important development direction to develop offline and online scenarios as early as possible." Last year, WeChat actually spent a lot of time on scene layout, including providing entrances for JD.com and Dianping, and even providing a secondary entrance for JD.com. In the taxi-hailing field, Didi and Kuaidi are fighting fiercely. But the results were disappointing. Long Wei, co-founder of Dianping.com, even said that expectations for the WeChat entrance might have been too high.

It is difficult to break the scene dependence, and WeChat faces a two-front battle

The current scenarios for mobile payment are nothing more than shopping (e-commerce), life (services) and interests (social networking). A survey by Yibang Power Network shows that even when shopping on WeChat, 60% of users still use Alipay to pay. Although WeChat has been connected to JD.com, Dianping and Meilishuo, its traffic diversion performance is average. Life scenarios are the area where competition is most intense between Alipay and WeChat. The two sides have been entangled since the taxi war last year.

Both parties have been very quick in their layout in this field, and even tax refunds for shopping in Europe can be directly deposited into Alipay accounts. Alipay is the dominant player in third-party payments and is currently making every effort to replicate its advantages in the mobile payment market. Given Jack Ma's personality, he will never allow WeChat to shake the foundation of Alipay. So it can be predicted that the competition between WeChat and Alipay in the mobile payment scenario will be even more fierce this year.

Interest scenarios are a product of the social networking era, and were originally an important means for WeChat to attack Alipay. However, as an ally of Alipay, Weibo has formed a strong blockade against WeChat. Because interest scenarios do not necessarily lead to payment behavior, and to convert them into payment scenarios, most of the time they need to rely on communication-driven development. For example, if I watch a movie or listen to a song I like, it is only possible to lead to purchases if I share it on social platforms. However, judging from a series of bans on WeChat some time ago, its closed nature means that only products within the Tencent system can be shared freely on WeChat. This means that interest scenarios can only be established within the Tencent ecosystem, which is obviously not conducive to the transformation from interest scenarios to payment behaviors.

In this regard, Weibo, which has stronger communication capabilities, can obviously bring greater driving force. Last year, Weibo and Taobao jointly launched a pre-sale of movie tickets, which sold more than 200,000 movie tickets in four days. The number of paying users for music downloads during the testing period also exceeded 100,000. The rewards and paid subscriptions launched for original creators in vertical fields have had more than 300,000 users by the end of last year, and the latter has brought original creators more than 3.5 million in revenue. All this demonstrates Weibo’s efforts and effectiveness in driving the conversion of interest scenarios into payment behaviors.

To sum up, the scenario dependence of mobile payment cannot be broken. How to provide users with as many and reasonable scenarios as possible is a problem that major platforms need to continue to solve. Alipay’s advantage in shopping scenarios is difficult to replace. If WeChat Pay wants to make a breakthrough, it must fight on two fronts with Alipay and Weibo in life scenarios and social scenarios.

However, WeChat first needs to make one thing clear: the number of card bindings does not represent activity, and an inflated number of card bindings can only lead to unrealistic speculation about WeChat Pay from the outside world, which may even cause confusion.