Sending Lucky Money via WeChat—A Highlight of 2015 Chinese New Year

March 6, 2015

(By Chenying Tan, Research Assistant of Law-Asia)

Eating dumplings, appreciating dragon dance and texting greetings to friends are what Chinese usually do to celebrate Lunar New Year. In February 2015, thousand-year-old festival traditions were vibrated by a new activity—sending lucky money (cash-filled virtual red envelops, or Hongbao) by mobile phones, and it went viral in China two days before New Year’s Eve.

WeChat, a mobile app like WhatsApp, launched a new feature that allowed its users to send and receive lucky money by linking up their bank accounts to WeChat’s digital wallet. Users may either send lucky money directly to other WeChat users who have also linked their bank accounts to WeChat, or, by spice things up, wrap a number of red envelopes and distributed them randomly among users in a chat group. Because chances of getting a red envelope are limited, users in the same chat group usually have to compete for lucky money.

Technology has changed the way Chinese celebrate their Lunar New Year. While in Chinese culture, receiving lucky money is a privilege of children, WeChat nowadays attracts people of all ages to enjoy this festival activity, as parents are sending money to children, husband to wife, bosses to employers and friends to friends. Moreover, lucky money not only brings material value to receivers, but is a way of showing best wishes and respect to others. Particularly, by competing in claiming money in a chat group, more people became active in online social media, sharing and spreading enjoyment with WeChat friends.

There is no denying the fact that Wechat’s developer–Tencent Company, a Chinese internet giant is the biggest winner in the lucky money game. While WeChat users are allowed to cash lucky money, most people prefer maintaining money in WeChat digital wallet or making a payment in online stores, which are also sponsored by Tencent. By directing people to use its personal finance products, Tencent made their first success in attempt to leverage its dominance in social network and e-commerce, and unlocking more possibilities in China’s internet finance, or more exactly, mobile finance, which is regarded as one of emerging industries in the near future.

The idea of offline-to-online money transfer was originated from Tencent’s long-time rival–Alibaba, which allowed users to send lucky money through its payment platform Alipay on last New Year’s Eve. Yet, due to a small number of users and a strict banking regulation, Alibaba’s lucky money activity did not receive much attention. On the contrary, WeChat app owns an estimated 500 million registered users in China and 20 millions users overseas. By linking a networking platform with digital wallet, Wechat won five million banking accounts in two days. According a report from Xinhua Agency, more than five million people participated in the lucky money activity before New Year’s Eve. At its peak hours, over 121,000 red envelopes were being claimed within five minute, generating more than one billion cash flow.

While people are still immersing themselves in the red envelope bombs, some scholars and lawyers have raised legal problems and risks arising out of mobile money transfers. For instance, some argues that lucky money offers a concealed way of conducting business bribery; others worry about tax and interest issues of money retained in Wechat account and a possibility of personal information leakage.

By a way of defending Alibaba’s dominance, Jack Ma, the president of Alibaba, announced that he dropped his Wechat account. Alibaba and Tencent have been competing with each other in mobile-app-based service for a long time, ranging from digital wallet to cab networking. Whether or not WeChat has become a real threat to Alibaba’s territory of internet business, the competition between two giants will undoubtedly promote China’s internet finance market and ultimately benefit users.

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7 Responses to Sending Lucky Money via WeChat—A Highlight of 2015 Chinese New Year

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