How do Alipay and WeChat make money? Unbelievable, the annual income of 50 billion just by scanning the code.
The daily active users of WeChat exceed 1 billion, and the monthly active users of Alipay exceed 700 million. The huge user base makes them a lot of money. According to the 2019 financial report, Tencent’s annual revenue was 377.3 billion yuan, while Alipay’s was 120.6 billion yuan. So how on earth do they make so much money?
Tencent’s main business
In many people’s minds, Tencent is an entertainment company whose main business is games and other entertainment services. This is indeed true. Tencent operates a total of 147 games, including the familiar King of Glory, Cross Fire, Dungeon and Warriors, etc. And everyone’s “krypton gold” in Tencent games brought it an annual income of 114.7 billion yuan.
In addition to game revenue, Tencent has also developed a variety of privileged services such as QQ membership, video membership, novel and accelerator membership, as well as yellow diamond and blue diamond. These members also bring in 80 billion yuan in revenue each year. So, where does the remaining nearly 150 billion yuan in revenue come from?
If you still think of Tencent as an entertainment company, you are wrong, because it may still be an e-commerce service company. Some people may be curious, Tencent does not have an e-commerce platform like Taobao, how can it dare to say that it can provide services for e-commerce?
In fact, Tencent’s confidence comes entirely from its two major social platforms, QQ and WeChat. It can be said that Chinese people who can surf the Internet now have at least one software application on their mobile phones to maintain contact with family, friends and even companies. They are equivalent to the foundation of Tencent’s various entertainment services. Without these two “foundations”, there would be no huge commercial buildings built on them.
At first, Tencent relied on QQ’s user base to develop business services such as Yellow Diamond, Blue Diamond, and QQ membership to make money, and later expanded into games and entertainment projects. At this point, QQ has reached the ceiling, because there is no money to make, so it has to enter other industries.
How does WeChat make money?
Tencent has continued to use QQ’s secret of success, and first created a social platform such as WeChat, which has reached 1 billion daily active users in just 10 years. The huge user market was the first to drive the development of wechat business, and it also provided a broader way for game services. For example, games such as King of Glory launched the WeChat area server, and WeChat’s own mini-program games, etc.
But WeChat did not go back to QQ’s old ways, because it launched the main business of “WeChat Payment” and directly participated in the transactions of our daily life. The convenient service of scanning code payment is of course not in vain. Every transaction made through WeChat payment will be directly charged a minimum handling fee of 2/1000, and merchants in most industries will be charged a handling fee of 0.6%.
We can do a rough calculation to know how much money WeChat can make a year by scanning QR codes. The annual transaction scale of third-party mobile payment in China is 77.46 trillion yuan, and WeChat payment accounts for nearly 40% of the market. That is to say, the annual flow of WeChat payment is about 30 trillion yuan. If all of these transactions come from merchants, WeChat could generate an annual revenue of 180 billion yuan just by charging merchants’ fees.
Of course, in fact, the handling fee from merchants may be less than half, most of which are small transfers, which do not charge handling fees. In addition, it is the WeChat withdrawal fee that everyone is most troubled by. The high fee of 0.1% is really a headache for many individual merchants. But in fact, the total income of this withdrawal fee is not much, and most of these fees did not go into Tencent’s own pocket, but to the banks that cooperate with it.
Therefore, the WeChat payment project is fully calculated, and the annual revenue is probably more than 50 billion, but this figure is still unimaginable for ordinary people.
Since it has a user group of more than 1 billion and has launched WeChat payment as a convenient means, some powerful e-commerce companies will naturally not miss such a huge amount of traffic, and if they want to obtain this traffic support, they naturally need to Paid out. For example, in one of the third-party services section of the WeChat payment page, there are 12 large e-commerce platforms. And these 12 positions, saying that they are all made of gold is no exception. Take Pin Xixi as an example. Do you know how much it costs each year to grab this position?
In 2018, in the strategic cooperation agreement between Pinxixi and Tencent, it was clearly mentioned that it spent 2.8 billion US dollars to buy this position for 5 years. In other words, as long as you sit in this position, whether you make money or not, you have to pay $1.56 million in rent every day, which is much more expensive than directly renting a building.
Of course, in addition to these main businesses, WeChat also has other side businesses. For example, the annual certification fee of some WeChat official accounts is 300 yuan, and the advertising business both WeChat and QQ will accept. Every time you see and click on a game or advertisement of a WeChat applet, you are indirectly making money for Tencent. It can be said that people really make money by “lying”.
How does Alipay make money?
Compared with WeChat, Alipay is not a social platform, so its sharing function is not strong. Jack Ma once wanted to rely on Alipay red envelopes to make it a “financial version of WeChat”, but it proved to be impossible. So Alipay took its own unique route, specializing in finance.
As one of the two major third-party payment platforms in the market, Alipay naturally charges merchants a code scanning fee like WeChat, which is also 0.6%. In addition, Alipay relies on Taobao, its own unique e-commerce platform, to monopolize the payment method of Taobao users. That is to say, all products sold by Taobao stores are traded through Alipay, and each Taobao product has to pay a handling fee of 0.6%. Later, Jingdong cooperated with WeChat payment, and the reason was the same.
Then, Alipay launched the “Huabei” service. At first Huabei was to allow everyone to consume in advance and expand consumption, so as to better serve Taobao. However, as major shopping malls and supermarkets gradually accept Huabei instalments, it is no longer limited to Taobao, but focuses on the entire scan code payment business. This merchant’s handling fee is higher, reaching 0.8%, and in addition to the handling fee, Alipay will also charge users 5/10,000 interest.
Another unique project is separated from Huabei, and that is Sesame Credit Score. Guess how Sesame Credit Score makes money? In our daily life, when we use Sesame Credit the most, it is nothing more than scanning QR codes to ride shared bicycles and borrow power banks. The company behind them needs to apply to Alipay to check your Sesame Credit score in order to decide whether to lend you the product. Of course, this service is not free. The company needs to pay a handling fee of 4 cents for each check of the personal Sesame Credit score.
Huabei is not strictly a loan software, but its daily interest of 5/10,000 is very profitable. Don’t think that the interest rate of 5/10,000 per day is a small amount. If it is converted into a year, its interest rate is as high as 18.25%, while the bank’s loan interest rate is only 4.35%, which is more than four times that.
After Huabei, Alipay launched borrowing again, and the interest is about 3/10,000 to 7/10,000. Although its interest is similar to Huabei, it actually has a large number of loans, and there is no interest-free situation like Huabei, so the total interest income is naturally much higher. These two major loan services can earn more than 5 million income for Alipay every year, which is not without huge profits.
It can be seen that Alipay understands its advantages very well. It hopes to build itself into an electronic bank, and quickly launched Yu’ebao. Yu’e Bao is similar to bank deposits. It first lends the money you keep in it to the bank, and then the bank lends it to other companies or individuals to charge high loan interest. The money you earn will be distributed to Yu’ebao, and when it comes to your hands, the interest is only about 2%.
However, Yu’ebao not only has deposit services, they have control over the money you store in it. As a financial company, Alipay naturally knows how to “make money with money”. The first way is to invest in funds, or help other fund companies sell fund shares to charge fees.
Another way is the insurance business. Let’s not talk about whether insurance is a lucrative industry, but under big data, Alipay can screen out people who are not easy to lose money and ensure that their interests are maximized. One result of the promotion of this big data screening insurance business is that for every 10,000 yuan in premiums, Alipay can extract more than 2,000 yuan in premiums.
Seeing this, I believe everyone has a clear understanding of the money-making routines of WeChat and Alipay. So in your daily life, do you prefer to store change in WeChat or Alipay?
