The race to be China’s prime fintech platform: Ant vs Tencent

By | November 10, 2020

As Ant Group seizes the world’s consideration with its record initial public offering, which was abruptly called off by Beijing, traders and analysts are revisiting Tencent’s fintech pursuits, acknowledged as Ant’s archrival in China.

It’s considerably sophisticated to do that, not least as a result of they’re sprawled throughout a lot of Tencent properties and, not like Ant, don’t go by a single model or operational construction — a minimum of, not one that’s apparent to the surface world.

Nevertheless, once you tease out Tencent’s fintech exercise throughout its wider footprint — from direct operations like WeChat Pay by means of to its sizeable strategic investments and third-party marketplaces — you may have one thing comparable in measurement to Ant, and in some companies even larger.

Hidden enterprise

Ant refuted the comparability with Tencent or anybody else. In a reply to China’s securities regulator in September, the Jack Ma-controlled, Alibaba-backed fintech big stated it’s “not comparable” to WeChat Pay, the fintech instrument inside WeChat, Tencent’s flagship messenger.

“Within the area of digital funds and service provider service, there are lots of gamers around the globe, together with Tencent’s WeChat Pay. However the funds companies provided by these corporations are completely different from our digital funds and service provider companies. They don’t seem to be comparable. When it comes to digital finance, our means of working with and serving monetary establishments, in addition to our income mannequin, are novel and should not have a counterpart,” the corporate famous in a considerably hubristic reply.

There’s no denying that Ant is a pioneer in increasing monetary inclusion in China, the place tens of millions stay exterior the formal banking system. However Tencent has performed catch-up in digital finance and made main headway, particularly in digital funds.

Each corporations ventured into fintech by first providing shoppers a technique to pay digitally, although the manufacturers “Alipay” and “WeChat Pay” fail to replicate the breadth of companies touted by the platforms as we speak. Alipay, Ant’s flagship app, is now a complete market promoting Ant’s in-house merchandise and myriad third-party ones like micro-loans and insurance coverage. The app, like WeChat Pay, additionally facilitates a rising checklist of public companies, letting customers see their taxes, pay utility payments, e-book a hospital go to and extra.

Screenshots of the Alipay app. Supply: iOS App Store 

Tencent, alternatively, embeds its monetary companies contained in the cost options of WeChat (WeChat Pay) and the enormous’s different common chat app, QQ. It has thus been traditionally troublesome to make out how a lot Tencent earns from fintech, one thing the enormous doesn’t disclose in its earnings experiences. That is reflective of Tencent’s “horse racing” inner competitors, during which departments and groups usually rival fiercely towards one another fairly than actively collaborate.

Screenshots of WeChat Pay inside Tencent’s WeChat messenger

As such, now we have pulled collectively estimates of Tencent’s fintech companies ourselves utilizing a mixture of quarterly experiences and third-party analysis — a mark of how un-transparent a few of this actually is — but it surely begs some attention-grabbing questions. Will (ought to?) Tencent in some unspecified time in the future comply with in Alibaba’s footsteps to carry its personal fintech operations beneath one umbrella?

Consumer quantity

When it comes to consumer measurement, the rivals are going neck and neck.

The Alipay app recorded 711 monthly active users and 80 million month-to-month retailers in June. Amongst its 1 billion annual customers, 729 million had transacted in a minimum of one “monetary service” by means of the platform. As within the PayPal-eBay relationship, Alipay advantages tremendously by being the default funds processor for Alibaba marketplaces like Taobao.

As of 2019, greater than 800 million customers and 50 million retailers used WeChat to pay month-to-month, a giant chunk of the 1.2 billion active user base of the messenger. It’s unclear how many individuals tried Tencent’s different fintech merchandise, although the agency did say about 200 million folks used its wealth administration service in 2019.


Ant reported a complete of 121 billion yuan or $17 billion in income final yr, almost doubling its sum from 2017 and placing it on par with PayPal at $17.8 billion.

In 2019, Tencent generated 101 billion yuan of income from its “fintech and enterprise companies. The phase primarily consisted of fintech and cloud merchandise, business analysts advised TechCrunch. With its cloud unit ending the yr at 17 billion yuan in revenue, we are able to enterprise to estimate that Tencent’s fintech merchandise earned roughly or not more than 84 billion yuan ($12 billion), from the interval — paled by Ant’s determine, however not dangerous for a relative latecomer.

The sheer measurement of the fintech giants has made them extremely engaging targets of regulation. More and more, Ant is downplaying its “monetary” angle and billing itself as a “expertise” ally for conventional establishments fairly than a challenger. Nowadays, Alipay depends much less on promoting proprietary monetary merchandise and payments itself as an middleman serving to state banks, wealth managers and insurers to succeed in prospects. In return for facilitating the method, Ant fees administrative charges from transactions on the platform.

Now, let’s flip to the rivals’ 4 major enterprise focuses: funds, microloans, wealth administration and insurance coverage.

Ant vs. Tencent’s fintech companies. Sources for the figures are corporations’ quarterly experiences, third-party analysis and TechCrunch estimates.

Digital funds

Within the yr ended June, Alipay processed a whopping 118 trillion yuan in cost transactions in China. That’s about $17 trillion and dwarfs the $172 billion that PayPal dealt with in 2019.

Tencent doesn’t disclose its funds transaction quantity, however knowledge from third-party analysis corporations provide a touch of its scale. The business consensus is that the 2 collectively management over 90% of China’s trillion-dollar digital funds market the place Alipay enjoys a slight lead.

Alipay processed 55.4% of China’s third-party funds transactions within the first quarter of 2020, in line with market analysis agency iResearch, whereas one other researcher Analysys stated the agency’s share was 48.44% within the interval. As compared, Tenpay (the model assigned to the company-wide infrastructure that powers WeChat Pay and the less-significant QQ Pockets, yet one more identify to confuse folks) trailed behind at 38.8%, per iResearch knowledge, and 34% in line with Analysys.

On the finish of the day, the 2 companies have distinct consumer situations. The truth that WeChat Pay lies inside a messenger makes it a instrument for social, usually small, funds, corresponding to splitting payments and exchanging fortunate cash, a customized in China. Alipay, alternatively, is related to on-line buying.

That’s altering as Tencent tries to extend its ticket measurement by means of alliances. It’s tied WeChat Pay to portfolio e-commerce corporations like, Pinduoduo and Meituan — all Alibaba’s rivals.

Third-party funds had been as soon as an extremely worthwhile enterprise. Platforms used to have the ability to maintain buyer reserve funds from which they generated handsome interests. That profitable scheme got here to a cease when Chinese language regulators demanded non-bank funds suppliers to put 100% of customer deposit funds under a centralized, interest-free account final yr. What’s left for cost processors to earn are restricted charges charged from retailers.

Funds nonetheless account for the majority of Ant’s revenues — 43%, or a complete of 51.9 billion yuan ($7.6 billion) in 2019, however the proportion was down from 55% in 2017, an indication of the enormous’s diversifying enterprise.


Ant has turn into the go-to lender for consumers and small companies in a rustic the place tens of millions aren’t certified for bank-issued bank cards. The agency had labored with about 100 banks, doling out 1.7 trillion yuan ($250 billion) of client loans and 400 billion yuan ($58 billion) of small enterprise loans within the yr ended June. That amounted to 41.9 billion yuan or 34.7% of Ant’s annual income.

The scale of Tencent’s mortgage enterprise is more durable to gauge. What we do know is that Weilidai, the microloan product bought by means of WeChat, had issued an combination of three.7 trillion yuan ($540 billion) to twenty-eight million prospects between its launch in 2015 and 2019, in line with a report from WeBank, the Tencent-backed non-public financial institution that gives the WeChat-based mortgage.

Wealth administration

As of June, Ant had 4.1 trillion yuan ($600 billion) property beneath administration, making it one of many world’s biggest money-market funds. Working with 170 accomplice asset managers, the phase introduced in about 17 billion yuan or 14% of complete income in 2019.

Tencent stated its wealth administration platform collected property of over 600 billion yuan in 2018 and grew by 50% year-over-year in 2019. That ought to put its AUM in 2019 at round 900 billion yuan ($131 billion).

Insurance coverage

Final however not least, each giants have made large pushes into client insurance coverage. In addition to that includes third-party plans, Alipay launched a brand new technique to insure prospects: mutual assist. The novel scheme, which isn’t regulated as an insurance coverage product in China, is free to enroll and doesn’t cost any premium or upfront cost. Customers pay small month-to-month charges which can be pooled to pay for claims of vital sicknesses.

Insurance coverage premiums and mutual assist contributions on Ant’s platform reached 52 billion yuan, or $7.6 billion, within the yr ended June. Working with about 90 accomplice insurers in China, the phase contributed almost 9 billion yuan, or 7.4%, of the agency’s annual income. Greater than 570 million Alipay customers participated in a minimum of one insurance coverage program within the yr ended June.

Tencent, alternatively, faucets companions in its comparatively uncharted territory. Its insurance coverage technique consists of in-house platform WeSure that works like a intermediary between insurers and shoppers, and Tencent-backed Waterdrop, which supplies each conventional insurances and a rival to Ant’s mutual assist product Xianghubao.

Within the first half of 2020, WeSure, Tencent’s major insurance coverage operation that sells by means of WeChat, paid out a complete of 290 million yuan ($42.4 million), it announced. The unit doesn’t disclose its quantity of premiums or revenues, however we are able to discover clues in different figures. Twenty-five million folks used WeShare companies in 2019 and the common premium quantity per consumer was over 1,000 yuan ($151). That’s, WeShare generated not more than 25 billion yuan, or $3.78 billion, in premium that yr as a result of the consumer determine additionally accounts for a great variety of premium-free customers.


Transferring ahead, it stays unclear whether or not Tencent will restructure its fintech operations in a extra cohesive and collaborative means. As they increase, will traders and regulators demand that? And what alternatives are there for others to compete in an area dominated by two large gamers?

One factor is for positive: Tencent might want to tread extra fastidiously on regulatory points. Ant’s achievement is a win for entrepreneurs seeking to “disrupt” China’s monetary sector, however its halted IPO, which is tied to regulatory issues and reportedly Jack Ma’s hubris, additionally sounds an alarm to contenders that policymaking in China can be capricious.

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