Tencent on the hunt for online revenue with WeChat service

A user logs on to the WeChat service on a smartphone in Boao, Hainan province. Tencent Holdings Ltd has started to provide online payment services through the social networking and messaging service. [Photo/Xinhua]

Tencent Holdings Ltd, China's largest listed Internet company, has enabled online transactions for selected merchants by linking a payment service to its popular WeChat smartphone application.

The move rewrites the rules of retailing and advertising on the mobile front. It is also part of a consistent company strategy to commercialize WeChat, which has more than 300 million users worldwide.

The app lets users send voice messages, photos and other media the way they might send text messages, without charging extra fees.

Since early June, WeChat has empowered a selected few of its registered corporate accounts to make online shopping viable.

WeChat does all back-end technical integration and support for these vendors, including page design and payment linkups, said Liu Sishan, a Tencent public relations officer.

Online transactions are made available via credit cards, online banking or TenPay, the company's third-party payment platform, she added.

TenPay, like domestic rival Alibaba Group Holding Ltd's AliPay and eBay Inc's PayPal in the US, allows merchants to process payments from customers' personal accounts.

For instance, fast-food chain McDonald's Corp is among the first batch of merchants to open an online channel via WeChat. Followers of McDonald's public account may pay three yuan ($0.49) for an afternoon tea discount coupon, and transactions are completed under the WeChat framework.

Liu did not reveal how Tencent charges the vendors.

Speaking on the sidelines of this year's session of the National People's Congress, company head Pony Ma said Tencent would begin introducing mobile social games on WeChat and introduce micro-payments for services like taxis, among other measures to make money off the application.

Tencent has long harbored an interest in the e-commerce arena, but is looking at ways to monetize its user base without charging for the app. For instance, it encourages WeChat users to scan codes at stores to purchase products and enjoy discounts.

Analysts said such a practice is likely to herald a wave of advertising on WeChat from retailers, spelling a decent return for the company.

"The mobile phone payment service on WeChat marks one key step on Tencent's path to develop e-commerce. And it provides momentum for the change taking place within the whole industry - future payments will take place on mobile devices," said Yi Fanghan, an independent Internet industry blogger.