how-does-wechat-make-money

How Does WeChat Make Money? The WeChat Business Model In A Nutshell

WeChat is a “super app” or an app that can do many things, from messaging to mobile payments and social media. Developed by Tencent, WeChat is among the most popular Super Apps in China. WeChat makes money via value-added services (with services like Moments, Public Accounts, and Gaming), advertising, and payments on the transaction processed through it.

Origin Story

Developed by Chinese conglomerate Tencent in 2011, WeChat is a messaging, mobile payment, and social media app. The platform was originally called Weixin by creator Allen Zhang and only became WeChat after it passed 100 million users in 2012.

WeChat is often described as the Chinese “app for everything” because of its high level of functionality. Far from being a simple messaging app, users can play video games, hold video conferences, and share photographs or their location if desired.

As part of the Chinese government initiative to support eCommerce in China, the platform also incorporates digital payment services under the name WeChat Pay. This allows users to pay bills, transfer money to others, and order goods or services.

In 2018, WeChat became the world’s largest standalone app with over 1 billion active users.

WeChat revenue generation

Traditional instant messaging apps have proven difficult to monetize, but WeChat has developed several revenue streams by becoming an essential part of daily life. WeChat average revenue per user (ARPU) is $7, or seven times that of similar service WhatsApp.

Here is a look at each revenue stream in more detail.

Value-added services

WeChat sells many value-added services to consumers:

  • Moments – this is the name given to the WeChat social feed, giving users an interactive platform to post images and messages and share articles and music. So-called stickers (emoticons) can also be used while messaging, with an average price of $0.99 for a set.
  • Public accounts – WeChat users or businesses can create a public account to interact socially with subscribers or provide them with services. Official organizations must be verified beforehand for approximately US $45, with many using public accounts to offer hospital pre-registration, credit card services, or visa renewals. Users can opt to receive tips from readers who deem their content valuable, and it is safe to assume WeChat takes a percentage of this amount.
  • Gaming – mobile gaming is extremely popular in China, with most citizens never having grown up with desktop gaming. Once they became addicted to a particular game, WeChat offers value-added services that enhance gameplay. These include better weapons, avatar costumes, and virtual VIP rooms.

Advertising

WeChat also makes money by advertising, which has been progressively added to most WeChat functions over the years.

Advertising has been particularly successful on the WeChat Moments platform. Small and large businesses can target a user based on their physical location.

WeChat also makes advertising revenue from the blogs associated with public accounts. Recent figures suggest there are over 15 million individual and business blogs inside the WeChat app.

WeChat payments

As a digital payment provider, WeChat charges users a 0.01% fee to withdraw funds from their WeChat Wallet when the transfer sum exceeds 1,000 yuan. Transfers within the app ecosystem are free of charge.

Key takeaways

  • WeChat is a messaging, mobile payment, and social media app developed by Chinese conglomerate Tencent. With high functionality, it is often called the Chinese “app for everything”.
  • WeChat makes money by selling a range of value-added services. These include stickers to enhance the instant messaging experience, video game upgrades, and public account verification for organizations.
  • WeChat also drives revenue through advertising, with implementation most successful on the Moments platform. As a digital payment provider, the platform also charges a small fee to withdraw funds from a digital wallet.

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Published by

Gennaro Cuofano

Gennaro is the creator of FourWeekMBA which reached over a million business students, executives, and aspiring entrepreneurs in 2020 alone | He is also Head of Business Development for a high-tech startup, which he helped grow at double-digit rate | Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy | Visit The FourWeekMBA BizSchool | Or Get The FourWeekMBA Flagship Book "100+ Business Models"