The head of WeChat Africa Brett Loubser. (Supplied)
Johannesburg - Instant messaging application WeChat has launched a local digital wallet that it hopes could replace the need to carry cash or cards.
WeChat Wallet enables electronic cash transfers, the use up to three chip and PIN debit and credit cards, and the ability to transact via cards verified by Visa and MasterCard.
The app requires card details to be entered but once activated users can cash in or cash out at Standard Bank ATMs and retailers, including Spar, Cambridge, Rhino and Choppies Stores. While WeChat has a partnership with Standard Bank, any bank user can use the service and even the unbanked can access its features.
Users can also pay for services such as airtime, data, electricity and food using the digital wallet and it has further integration with merchants using Standard Bank’s cashless payment app SnapScan.
WeChat, which is owned by Chinese internet giant Tencent, has implemented digital payment features in other markets. But its wallet in South Africa has been adapted to local conditions and regulations, said Brett Loubser who is the head of WeChat Africa.
“The wallet that we've launched is unique to South Africa but it's based on the same framework and principles as the wallet that exists for example in China or Malaysia or Hong Kong,” Loubser told Fin24 by phone.
"It's just that because of the specific things that we think that our local market requires and the stuff that we believe is going to be of value to our local market, we have some functionalities that don't exist in any of the other examples of WeChat payment,” he said.
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Open loop wallet
WeChat has teamed up with Standard Bank to tap its reach and remittance network in South Africa.
But Loubser said that the WeChat Wallet is an ‘open wallet’. Users only need to be 16 or older and have a valid South African identification document to use the service.
"It's an open loop wallet. So, whatever cash you've got in there, we'll give you as many ways as possible to get the cash out because it needs to feel like real money to people and I think that's going to encourage people to want to use it and try it out,” Loubser told Fin24.
Loubser explained that the introduction of a digital wallet in the South African market is all about timing.
WeChat launched in South Africa in 2013 and has seen partnerships being struck up with the likes CliffCentral and other services like delivery app startup Picup.
"It's a timing thing. This particular innovation just adds additional value to the ecosystem. So, if you take a step back and look at actually how we've tried to expose value for WeChat to the South African market, we partnered with a variety of third parties,” Loubser said.
Globally, WeChat says it has 650m monthly active users, but as a policy Tencent doesn’t reveal numbers for individual markets such as South Africa.
Local researchers, though, have said the service could have up to five million users in South Africa.
“So, I can't confirm or deny, but that's the ballpark,” Loubser told Fin24.
If WeChat has five million users, this means that it’s bigger than Mxit which revealed last month that its monthly active users amount to just 1.2 million.
However, WeChat would still be smaller than WhatsApp which has over 10 million users in South Africa while Facebook has 13 million users in the country, according to recent research from World Wide Worx and Fuseware.
More than instant messaging
WeChat, though, is positioning itself to be more than just an instant messaging service as it has other apps such as Picup and food delivery service OrderIn.
"And all of these things are products and offerings that kind of operate within the ecosystem and platform that WeChat is because our single biggest differentiator from the other instant messaging products out there is the fact that we are a platform and that third parties can plug in,” Loubser said.
“And as we start moving forward with partners like Picup and OrderIn, which is a food-delivery service, it follows naturally that building transactions directly into the platform just delivers the better customer experience. And that's what we're aiming to do. So, the timing was just right,” he said.
*Naspers has a stake in Tencent which owns WeChat. Fin24 is part of Naspers owned Media24.