Inside WeChat’s Growing Micropayment Ecosystem

Crunchbase News previously covered Medium’s micropayment strategy. The online publisher, founded by Ev Williams of Twitter and Blogger fame, wants to translate claps into bucks for writers. Since I run my own WeChat official account, the announcement reminded me that the all-in-one chat app has already built a similar ecosystem back in 2015.

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Integrated into the daily life of most Chinese people with smartphone access, WeChat is used to book appointments, pay bills, schedule deliveries, and a lot more.

As of Q4 2016, the behemoth under Tencent has acquired 889 million users. Though some of its users are international, the number is more than half of the Chinese population (approximately 1.4 billion).

Although micropayments for content have not yet taken off in the U.S., it’s possible that WeChat’s successful micropayment strategy could provide a template—despite obstruction from the iPhone’s creator. So to gain some understanding, we dug into the features of WeChat official accounts, and chatted with a few bloggers that are part of the ecosystem.

What Are WeChat Official Accounts?

WeChat’s official accounts can be broken down into three types: service, enterprise, and subscription. (China Channel gives you a good rundown of how they work). To compare micropayments to Medium, we are going to focus on WeChat’s subscription tier.

Subscription accounts share a mix of daily news, opinion columns, and personal blogs. A subscription account can also serve as a content marketing tool for companies and a distribution channel for publications.

Anyone can start a subscription account, but not all accounts are branded with the “original” tag. How an account becomes original and what impact censorship has on content types remain unclear; however, patterns indicate that the “original” tag is given to accounts that put out high-quality posts and frequently engage with readers. In return, original subscription accounts are provided with safeguards against plagiarism.

Access to advanced widgets is also offered, including commenting and the ability to receive microtransactions. At the bottom of each post, readers can donate an amount of their choosing to a writer. Below is what the tipping interface looks like from my own subscription account. The red button means to reward:

Once the tips are processed, the account owner will receive a notification specifying the donor’s WeChat name (often not real names) and amount tipped.

According to China Academy of Information and Communications Technology, 10.7 percent of WeChat users have used the tipping feature. Out of those, 37 percent say that they tip from one ($0.15) to ten yuan ($1.5) per month. Four percent tip more than 100 yuan ($15). If we do the math, tipping translates into at least $52 million in aggregate per month.

For context, Medium charges subscribers a five-dollar monthly fee, which is then distributed to content producers. Per Medium’s Partner Program email, shared by Martin Bryant on Twitter, the claps program has shown promising numbers:

The highest-performing author on Medium's Partner Program earned $1,342.54 in the first two weeks of September. Average was $68.44

— Martin Bryant (@MartinSFP) September 14, 2017

Whether Medium turns claps into a full-scale ecosystem remains to be seen. And on both WeChat and Medium, readership and donations are concentrated to a few accounts with large followings.

David Zhu, who blogs about tech entrepreneurship and career development, has around 10,000 followers. The author told Crunchbase News that though “tipping feature [encourages] writers to produce good content,” only “ones that update daily with high-quality content” have the potential to become self-sufficient through micropayments.

According to Zhu, one of his articles on using code to standardize resumes got 15,374 clicks and 2174.44 yuan (almost $330) in tips. That was hard earned money, however. Zhu admitted that the article took him days to write and edit, something that he cannot do on a daily basis.

Not all has been sunshine and roses for WeChat, thanks to Apple’s determination to maintain its foothold in China.

The Apple-WeChat War

Tipping was introduced by WeChat back in 2015. However, in April, Apple forced WeChat to close down the feature on its iOS app, officially initiating the battle against Tencent to grab the China market. Apple’s In-App Purchase (IAP) guidelines forbid collecting funds through means other than its own payment system, which made WeChat’s tipping feature a violation.

In response, some writers have included payment QR codes in their posts, or hoped for more traffic from Android users. But the impact of the removal was still strongly felt among the content community, most of whom try to make a living off of their subscription accounts.

“When the tipping feature shut down, my goal of subsidizing my living costs fell through,” Can Yu, who runs a book review subscription account, told Crunchbase News. “While I still included a payment QR code at the bottom, I felt that reader engagement went down a lot without the donation button.”

However, a few days ago, months of discussions and anxiety among writers have finally been answered. Apple updated its IAP guidelines, allowing peer-to-peer donations. In this case, writers would be allowed to receive tips from their readers again. However, WeChat is required to make donations optional and cannot take a cut from the proceeds. The change might have been the fruit of Tencent CEO Pony Ma’s recent meeting with Tim Cook prior to the iPhone 8 launch.

While everything seems to be back to normal, another conflict is looming. This January, WeChat launched mini programs, which are essentially apps housed within the all-powerful app. Some speculate that mini programs will eventually replace real apps and possibly become new revenue streams for writers.

Lessons From WeChat

In the U.S., blog platforms tend to lack social elements, and chat apps have failed to fully integrate mobile payment systems. We cannot help but wonder why WeChat has succeeded in micropayments.

First, articles published on subscription accounts can be sent to friends directly or shared on Moments (similar to your Facebook or Twitter feed). The built-in community makes distributing content much easier, something that Medium has been struggling to accomplish.

Second, to process a micropayment on WeChat, you don’t need to type in your credit card information or log into Paypal. Users, most of whom already have money deposited in their WeChat wallet, can reward writers with just a few taps on the screen.

WeChat’s everything-in-one characteristic may be geographically unique, as China already has mature mobile payment and e-commerce infrastructures. Therefore, Medium claps probably won’t catch up with WeChat tips anytime soon. But for those interested in scaling micropayments in the U.S., there are some lessons worth gleaning from China’s mobile giant.

iStockPhoto / BrianAJackson