Chinese internet firm Tencent announced its latest financial results today, but one of the standout figures isn’t a financial stat. It’s that its messaging services, which include blockbuster mobile app WeChat — one of the services that is inspiring Facebook’s plans for its Messenger business — now has 200 million users’ credit cards bound to it.
Tencent pulled in a net profit of 7.584 billion RMB ($1.2 billion) on revenue of 26.594 billion RMB ($4.2 billion), and messaging is a huge part of that. WeChat and Weixin (the Chinese version of the service that includes localized services and bells and whistles) collectively account for 650 million monthly active users (MAU), while QQ, its instant messaging service that started out on desktop, counts 639 million smartphone users.
Tencent’s QQ Wallet and Weixin Pay, which run on the two aforementioned services, are only available in China and, since the company doesn’t break out its WeChat/Weixin user numbers by location, it is impossible to say what proportion of users in China have added their card to their account. But the rising number is impressive and likely to worry Alibaba, which runs rival mobile payments service Alipay. While Alipay leans on Alibaba’s vast e-commerce network for visibility, a service attached to a messaging app that people open regularly has the potential to be a lot more convenient to users and merchants alike.
Tencent has placed huge emphasis on enabling payments. Beyond supporting offline transactions in a similar way to Apple Pay and others, the Weixin service can be used to pay bills, make person-to-person transfers, buy items online, and more.
If you’re keen to connect the dots on where Facebook Messenger, Snapchat and others in the West are headed, Weixin is a product to watch. But replicating WeChat’s early payments success — and it is still too early to call it a proven success in that area — will be challenging for those outside of China.
Weixin benefits from the legacy of QQ, China’s arguably less competitive payments space (versus the U.S.), and the success of clever campaigns around Chinese New Year and other festivals during which the gifting of money is common.
While the payments services have huge potential, games continue to be the big revenue generator for Tencent on mobile. This past quarter, revenue from titles on QQ and WeChat/Weixin — which monetize by selling in-app purchases — rose 27 percent year-on-year to reach 14.3 billion RMB, or $2.25 billion. That includes PC-based games on the desktop QQ service, however, but Tencent said mobile was a big driver.
Advertising is also an area where Tencent is seeing revenue jump on mobile. A controversial move to monetize ‘Moments’, the social network feed inside WeChat/Weixin, helped grow performance-based advertising revenues to 2.4 billion RMB ($380 million) during the quarter. Tencent’s total ad revenue — across mobile and desktop, and including its popular video site and news portals — came in at 4.9 billion RMB, that’s around $770 million.