WeChat has started charging for cash withdrawals! Here’s what you need to know
WeChat announced on Tuesday that it will begin charging a fee when users make a money transfer from their WeChat Wallet to a bank account starting March 1st. Each user will have an exemption of RMB 1,000 (USD 153) in total, but once this amount is surpassed, users will be charged 0.1% of each transaction with a minimum fee of RMB 0.1.
As the most popular mobile SNS app in China, WeChat’s every move attracts wide attention. With that in mind, WeChat’s payment team made a formal response to some of the bigger questions from the public.
AllChinaTech’s team picked the most essential points for you here:
Q1. Why has WeChat Payment suddenly begun charging a transaction fee after being free for so long?
A: Every time a transfer involves a bank account, the transaction on WeChat Payment is charged a certain fee by banks. WeChat has been covering all these charges, but the pressure of the cost is too much for us now. So we hope to offset some of the massive costs of these charges.
After implementing this policy change, transfers between WeChat accounts, red envelopes and the usage of the Go Dutch function will still be free.
Q2: Why has WeChat stopped paying the fee for its users as they did before?
A: The price we’ll charge is 0.1% of the transaction. What we pay the banks is above 0.1%. WeChat was covering this amount before, but as our business soars, the pressure of the cost increase can’t be ignored.
Q3: Some are saying banks don’t charge to withdraw cash, so why does WeChat do it?
A: Our costs come from two places: 1) each time a transaction is made through our fast payment channel, we are charged a fee in accordance with the amount; 2) some banks charge us again when we transfer from the digital wallet to a bank account. We have chosen to cover all the costs of transferring between digital accounts, but are charging only for the costs from users transferring from digital wallets to bank accounts.
Q4: What is meant by “an exemption of RMB 1,000”?
A: From March 1st, 2016, when transferring from the digital wallet to a bank account, every user (defined by a personal ID) will be exempt from the fee until they have transferred a cumulative RMB 1,000. Once RMB 1,000 has been reached, all transfers will be charged at a percentage of 0.1%.
Q5: Why is it set at RMB 1,000?
A: Our primary reason for setting the bar at RMB 1,000 is that most users’ WeChat Wallet balance is, in fact, under RMB 1,000.
Q6: How exactly will users be charged when the amount surpasses RMB 1,000?
A: Using someone who has yet to transfer any money from WeChat Wallet to a bank account as an example: User A transfers RMB 1,500 to his bank account, he will be charged (1500–1000) × 0.1% = 0.5 RMB. The amount will be deducted from his WeChat Wallet.
Q7: Will this new policy affect commerce?
A: Business accounts and commerce won’t be affected by this new policy.
Q8: Will Li Cai Tong (WeChat’s personal investment function) be influenced as well?
A: No, to purchase investment products with debit cards in Li Cai Tong will still be free of fees.
Do people accept these answers? Not really.
A blogger and banker published an article on tech blog Huxiu.com that showed how, with a proper design, WeChat wouldn’t be charged much by banks. The suspicion is that WeChat is trying to induce users to spend more via WeChat Payment.
Because purchases made via WeChat Payment won’t be charged while money transfers from digital wallets to bank accounts will be, users may have a stronger tendency to use WeChat Payment for purchases as opposed to transferring money to their bank cards. This might actually be an attempt to boost the number of purchases made via WeChat.
The timing for WeChat to adopt this new policy is tricky: Apple Pay is officially launching in China on Thursday. Will Apple Pay’s alliance with Chinese banks steal more market share from WeChat as it begins to charge its users for cashing out their WeChat wallets? It’ll be worth your attention along with the launch of Apple Pay in China.
Rhea Liu | @yushan_l | February 17, 2016 05:29 pm
Originally published on AllChinaTech.com.
