Traditional Red Envelopes Are Going Digital Thanks To China’s Largest Internet Companies

Getting a fat hongbao, or red envelope, stuffed with crisp new notes is one of the hallmarks of Chinese New Year, which starts today and runs for two weeks. As China’s tech companies build their financial services, they want to convince people that hongbao exchanges can be just as fun when performed through a smartphone.

This year, the country’s three biggest Internet companies—Baidu, Alibaba, and Tencent—are offering their own version of online red envelopes and dressing up the custom with games and giveaways. Even the Chinese government is latching on to the digitized version of the tradition, giving away a total of 300,000 RMB (about $50,000) through Alipay, Alibaba’s mobile payment service.

Red envelopes are traditionally gifted to children during the holiday, but they can also be given to unmarried adults, elderly relatives, friends, and employees. The companies—which are referred to by the acronym BAT—run competing mobile payment platforms and their red envelope programs may convince people to keep using their mobile wallets even after the holiday is over.

WeChat_redenvelopeIt’s still too early to tell how many people will gift money online this year, but if the past popularity of WeChat’s red envelope service is a fair indicator, smartphone users are eager to try new twists on a beloved tradition. The messenger—which is owned by Tencent and China’s most popular with 650 million monthly active users—first enabled people to send red envelopes through the app’s WeChat Pay mobile payment service in 2014.

In 2015, the company says WeChat delivered over one billion red envelopes. Then on Jan. 1, 2016 (the start of the Gregorian calendar is also an excuse for red envelope giving in China), more than 2.3 billion red envelopes were sent.

To send gift money on WeChat, users click on a “red envelope” button in the main menu, then chose an amount and enter a gift message. Depositing money into each other’s WeChat Pay accounts is quick and more convenient than withdrawing cash and counting it out into packets, but it lacks the finesse of getting an actual red envelope stuffed with brand new notes.

To make giving money online a little bit more personable, WeChat has come up with a game that randomizes the amount dispersed among your gift recipients and then shows who got the most after everybody opens up their envelope.

Meanwhile, users of Baidu Wallet, which is made by China’s largest search engine developer, got into the action early. Between Jan. 28 and Feb. 8, the company says users sent 4.2 billion red envelopes online containing a total of 300 million RMB (about $45.6 million).

China’s largest e-commerce company Alibaba, put its own spin on the custom by handing out virtual red envelopes with cash or gift coupons during the Spring Festival Gala, a popular annual show that airs the evening before Chinese New Year starts.

The company hasn’t disclosed yet how much the publicity stunt cost or the total worth of the envelopes it handed out, but its mobile payments service Alipay is one of China’s largest, with about 400 million users.

Of course, the start of the lunar calendar isn’t just celebrated in China. Line, which has been banned in China for more than a year, is offering a red envelope service through Line Pay in Thailand and Taiwan, two of its top markets (the third is Japan).

TechCrunch has contacted all companies for their latest red envelope figures.