Baby Steps For Tencent’s Global Fintech Business

Like its rival Alibaba, Tencent has developed a large portfolio of overseas fintech investments. Some of these are strategic bets on rising Big Tech companies with fintech arms, such as Voyager Innovations in the Philippines and Sea Group in Singapore, which Tencent believes will eventually become dominant players. Other investments are more focused on facilitating access to the Chinese mainland market for fintechs that have a niche there, such as Australia-founded but Hong Kong-headquartered Airwallex.

While Alibaba’s Ant Group has been quietly trying to build its own cross-border payments ecosystem outside of China, Tencent hasn’t had a comparable overarching goal with its overseas fintech investments. This can be partly explained by Tencent’s fintech prowess stemming from its WeChat super app, which is not widely used outside mainland China and certain Chinese diaspora communities.

To be sure, Tencent has been trying to build a WeChat payment rail abroad – and WeChat Pay is widely accepted in many parts of the world where Chinese tourists travel. However, it has not turned into anything bigger than that and lacks crossover appeal to a wider international market because it is so closely tied to the domestic Chinese payments ecosystem. Simply put, if you don’t bank in mainland China, you’re unlikely to have much use for WeChat Pay.

Without the ability to expand the reach of the WeChat digital financial services ecosystem, there has been nothing to connect the various fintech players in Tencent’s portfolio of international investments – until now.

Tenpay Global and Tenpay Global Remittances

When Ant Group launched Alipay+, it was only a matter of time before Tencent responded with a new product (or products of its own). Not surprisingly, like Alipay+, Tenpay Global and Tenpay Global Remittances do not represent a watershed, but more of a rebranding campaign for existing services with a few tweaks here and there.

Tenpay Global can be useful in that it promises to consolidate a suite of cross-border payment products and solutions for businesses and consumers to serve different customer segments: e-commerce platforms, global business customers and individual customers and personal transfers.

Tenpay Global Remittances, meanwhile, will allow users of WeChat in mainland China to receive remittances directly to their WeChat wallet. This sounds more like an addition than something completely new, with Tencent saying in its press release that the “new feature builds on the existing remittance service available through the Weixin packaged bank card.”

Tencent’s financial arm will continue to partner with various global fintech firms as it expands its cross-border payment services. Some of the money transfer companies it counts as its partners include Wise, Remitly, E9Pay, Debunk Remit, Panda Remit, Paysend and WireBarley.

To attract users of the remittance service, Tencent and its partners will distribute subsidies; they call it an “incentive program”. This sounds a lot like what Alipay+ and its payment partners are doing.

Overcome obstacles

One of the constraints on Tencent’s cross-border payments business will be something it has no control over: China’s capital controls. While China is a huge remittance market, second only to India globally, Tenpay Global Remittances does not yet have the ability to build alternative rails for outgoing payments. In a nutshell, the money can only go one way for now: to China.

What Tencent can do is partner with firms licensed to handle outgoing cross-border payments, although this is obviously less optimal than being able to process the payments directly themselves. To that end, Tencent invested earlier this year in Easy Transfer, a startup that aims to make tuition less stressful for the many Chinese students who choose to study abroad.

That market is promising: Data compiled by Statista shows there were more than 700,000 Chinese studying outside mainland China in 2019 – though that dropped to just 350,000 in 2020 – while Tencent says it has 500,000 WeChat users who are “foreign students.”

Tony Gao, founder and CEO of Easy Transfer, told TechCrunch in a January 2022 interview that the internet giant now owns about 5% of his company. Simple transfer itself does not handle transactions directly; instead, it works with financial institutions licensed for cross-border payments in China.

“From anti-money laundering, identity verification to information security, WeChat makes cross-border payment transactions much more secure,” Gao said.

Perhaps in time Tencent will be able to increase the reach of the WeChat fintech ecosystem overseas, but tailored to serve its traditional customers, mainland Chinese.