WeChat Pay

WeChat Pay is a mobile payment service operated by the Chinese technology company Tencent. It is part of WeChat, known in mainland China as Weixin, a messaging and social app used by the great majority of the country's smartphone owners. Users link a bank card to the app and can then send money to contacts, pay merchants by scanning a code, buy goods and services inside the app and settle utility and other bills.

Together with Alipay, WeChat Pay accounts for most mobile payments in China, and the two changed the country from a largely cash-based retail economy to one of the most digital in the world in under a decade. Because payments sit inside an app that also provides chat, social media, shopping and public services, WeChat is the standard example of a super app.

Tencent had operated an online payment business, Tenpay, since 2005. WeChat itself launched in 2011, and a payment function was added to it in 2013. Adoption accelerated at the Chinese New Year of 2014, when Tencent introduced digital red envelopes, a version of the traditional gift of cash that could be sent to friends and group chats. Millions of users linked bank cards in order to send and receive them, giving the service a large base of funded accounts almost overnight.

From there it spread into shops, restaurants, taxis and street stalls through QR codes. In 2017 WeChat introduced mini programs, small applications that run inside the app, which let merchants take orders and payment without building their own software.

A user's account consists of a balance and one or more linked bank cards. A payment can be drawn from the balance or directly from a linked card through a fast-pay arrangement with the issuing bank, authorized by a payment password or a biometric check on the phone.

• Transfers and red envelopes. A P2P payment sent within a chat is credited to the recipient's balance.
• Merchant-scanned payment. The user shows a payment code on their phone and the cashier scans it.
• User-scanned payment. The user scans the merchant's printed static QR code or a dynamic QR code on a till display. Both are forms of QR payment.
• In-app and web payment. Payments are made inside mini programs, official accounts and third-party apps and websites that integrate the service.

Money in the balance can be moved to a bank card through a wallet withdrawal, for which a small percentage fee applies above a free allowance. Linked wealth management products allow balances to be placed in money market funds.

Merchants register directly with the service or through authorized service providers and banks that handle onboarding, hardware and support. They pay a service fee on each transaction, commonly well under 1 percent for ordinary retail, with rates varying by industry. This is lower than the typical merchant discount rate on cards in many countries, and together with the negligible cost of printing a code it explains the rapid spread among small businesses. Funds are settled to the merchant's bank account, usually on the next business day.

The payment business is conducted by Tenpay, which holds a license as a non-bank payment institution from the People's Bank of China. Several regulatory changes have reshaped how such institutions work. Since 2018, online payments that involve bank accounts must be cleared through NetsUnion, a central platform, instead of through direct bilateral links with banks. Since early 2019, payment institutions have had to deposit all customer reserve funds with the central bank, which removed the interest they formerly earned on balances.

Accounts are subject to real-name registration, with know your customer checks that determine annual payment limits. The authorities have also set standards for QR code payments and pushed for wallet interoperability, including mutual recognition of codes with UnionPay. The central bank's digital currency, the e-CNY, can be used through WeChat as one of its payment options.

WeChat Pay is accepted by merchants in many countries, mainly to serve Chinese travelers. An overseas merchant signs up through a local acquirer or payment service provider. The customer pays in renminbi from their Chinese account, and the merchant is settled in its own currency. Separate wallet services operate in Hong Kong and Malaysia in local currency for residents.

For most of its history the service was hard for foreigners to use, since it required a mainland bank account. Visitors can now link cards issued abroad on the major international networks and pay at merchants in China, subject to transaction limits, a change introduced in stages to ease travel for people without Chinese bank accounts.

WeChat Pay brought electronic payments to very small merchants and to consumers who had never held a credit card, and it is often cited in discussions of financial inclusion. Its dominance, shared with Alipay, has also raised concerns. For years the two ecosystems blocked or hindered links to each other's services, a practice regulators moved against from 2021. Dependence on a smartphone app has made everyday payments harder for elderly people and foreign visitors, prompting official reminders that merchants must not refuse cash. The scale of data that passes through a single app covering communication and payment is a further subject of debate.

• WeChat Pay
• Tencent