The race for China's prime fintech platform: Ant vs Tencent


As a group of ants With its record IPO, abruptly canceled by Beijing, investors and analysts are drawing Tencent's attention to fintech interests, which are recognized as Ant's arch-rivals in China.

This is a bit complicated, not least because they span a number of Tencent properties and, unlike Ant, they don't come from a single brand or operational structure – at least not one that's obvious to the outside world.

However, if you test Tencent's fintech operations on a broader basis – from direct operations like WeChat Pay off for its sizeable strategic investments and third-party marketplaces – you've got something comparable in size to Ant, and even larger in some services.

Hidden business

Ant disproved the comparison with Tencent or anyone else. In a response to China's securities regulator in September, the Jack Ma-controlled, Alibaba-backed fintech giant said it was "not comparable" to WeChat Pay, the fintech tool in WeChat, Tencent's flagship messenger.

“There are many digital payments and merchant service providers around the world, including Tencent's WeChat Pay. However, the payment services offered by these companies are different from our digital payment and merchant services. They are not comparable. In terms of digital finance, our way of working with and serving financial institutions and our revenue model are new and have no counterparts, ”the company stated in a somewhat Hubristic response.

There is no denying that Ant is a pioneer in expanding financial inclusion in China, where millions remain outside the formal banking system. However, Tencent has caught up in the digital finance space and has made great strides, particularly in electronic payments.

Both companies ventured into Fintech by initially offering consumers a digital payment option, even though the Alipay and WeChat Pay brands do not reflect the breadth of the services advertised by the platforms today. Alipay, Ant's flagship app, is now a comprehensive marketplace selling Ant's in-house products and countless third-party products like microcredit and insurance. The app, like WeChat Pay, also enables a growing list of public services so users can see their taxes, pay utility bills, book a hospital visit, and more.

Screenshots of the Alipay app. Source: iOS App Store

Tencent, on the other hand, is integrating its financial services with the payment capabilities of WeChat (WeChat Pay) and the giant's other popular chat app, QQ. It has therefore historically been difficult to figure out how much Tencent is making from fintech, which the giant does not disclose in its earnings reports. This reflects Tencent's internal horse racing competition, where departments and teams often compete against each other rather than actively collaborating.

WeChat Pay screenshots in Tencent's WeChat Messenger

That's why we've compiled estimates of Tencent's fintech businesses ourselves using a mix of quarterly reports and third-party research – a sign of how obscure this actually is – but it does raise some interesting questions. Will (should?) Tencent at some point follow in Alibaba's footsteps to bring its own fintech operations under one roof?

User number

When it comes to user size, the competitors go neck to neck.

The Alipay app had 711 monthly active users and 80 million monthly merchants in June. Of the 1 billion users per year, 729 million had processed at least one "financial service" via the platform. As in the PayPal-eBay relationship, Alipay benefits tremendously from being the default payment processor for Alibaba marketplaces like Taobao.

As of 2019, more than 800 million users and 50 million merchants used WeChat to pay monthly, a large fraction of Messenger's 1.2 billion active users. It is unclear how many people have tried Tencent's other fintech products, although the company said around 200 million people used its wealth management service in 2019.


Ant reported total sales of 121 billion yuan, or $ 17 billion, last year. This means that the amount has almost doubled compared to 2017 and put PayPal at $ 17.8 billion.

In 2019, Tencent had revenues of 101 billion yuan for its “Fintech and Enterprise Services”. The segment consisted mainly of fintech and cloud products, industry analysts TechCrunch told. With its cloud entity closing the year with sales of 17 billion yuan, we can assume that Tencent's fintech products made approximately or no more than 84 billion yuan ($ 12 billion) during the reporting period – fades from Ant's number, but not bad for a relative straggler.

The sheer size of the fintech giants has made them extremely attractive regulatory targets. Ant is increasingly downplaying his “financial” point of view and counting himself as a “technology” ally for traditional institutions rather than a challenger. Today, Alipay is less reliant on selling its own financial products and bills itself as an intermediary helping state banks, asset managers and insurers reach customers. In return for making the process easier, Ant charges administration fees for transactions on the platform.

Now let's turn to the four main areas of competitor business activity: payments, microcredit, asset management, and insurance.

Ant's fintech business vs. Tencent. Sources for the numbers are the company's quarterly reports, third-party research, and TechCrunch estimates.

Digital payments

In the year ended June, Alipay processed a whopping 118 trillion yuan in payments in China. That's roughly $ 17 trillion, dwarfing the $ 172 billion PayPal processed in 2019.

Tencent does not disclose its payment traffic volume, but data from third-party research companies give an indication of its magnitude. The industry consensus is that the two collectively control over 90% of China's trillion-dollar electronic payments market, on which Alipay has a slight lead.

According to research firm iResearch, Alipay processed 55.4% of China's third-party payment transactions in the first quarter of 2020, while another researcher, Analysys, said the company's share was 48.44% during the reporting period. By comparison, Tenpay (the brand associated with the company-wide infrastructure for WeChat Pay and the lesser-known QQ Wallet, another name that confuses people) was 38.8% according to iResearch data and 34% according to Analysys.

Ultimately, the two services have different user scenarios. The fact that WeChat Pay is included in a messenger makes it a tool for social, often small, payments like splitting bills and exchanging lucky money, as is common in China. Alipay, on the other hand, is associated with online shopping.

This is changing as Tencent tries to increase its ticket size through alliances. WeChat Pay is tied to portfolio e-commerce companies like, Pinduoduo, and Meituan – all of which are competitors of Alibaba.

Third party payments were once an incredibly profitable business. In the past, platforms could hold customer reserve funds from which they generated attractive interests. This lucrative system came to a standstill when Chinese regulators last year required non-bank payment providers to place 100% of customer deposits in a central, interest-free account. What payment processors still earn is limited fees charged by merchants.

Payments still make up the majority of Ant's revenue – 43%, or a total of 51.9 billion yuan ($ 7.6 billion) in 2019, but the percentage fell from 55% in 2017, a sign of the giant's diversifying business.


Ant has become the preferred lender for buyers and small businesses in a country where millions are ineligible for bank-issued credit cards. The company had worked with around 100 banks, lending 1.7 trillion yuan ($ 250 billion) in consumer credit and 400 billion yuan ($ 58 billion) in small business credit for the fiscal year ended June. That was 41.9 billion yuan, or 34.7% of Ant's annual sales.

The size of Tencent's lending business is harder to gauge. What we do know is that Weilidai, the microcredit product sold through WeChat, spent a total of 28 million customers on 3.7 trillion yuan ($ 540 billion) between its launch in 2015 and 2019, according to a report from Tencent-backed WeBank Private bank providing the WeChat-based loan.

Asset management

In June, Ant managed 4.1 trillion yuan ($ 600 billion) in assets, making it one of the largest money market funds in the world. Working with 170 partner wealth managers, the segment generated sales of around 17 billion yuan or 14% of total sales in 2019.

Tencent said its wealth management platform accumulated over 600 billion yuan in assets in 2018 and grew 50% year over year in 2019. That puts the AUM at around 900 billion yuan ($ 131 billion) in 2019.


Last but not least, both giants have made great strides in consumer insurance. In addition to introducing third-party plans, Alipay has introduced a new type of customer insurance: mutual aid. The new system, which is not regulated as an insurance product in China, can be registered free of charge and does not charge any premiums or advance payments. Users pay small monthly fees that are aggregated to pay critical disease claims.

Insurance premiums and mutual aid contributions on Ant's platform reached 52 billion yuan, or $ 7.6 billion, in June. Working with around 90 partner insurers in China, the segment contributed nearly 9 billion yuan, or 7.4%, to the company's annual revenue. More than 570 million Alipay users participated in at least one insurance program in the fiscal year ended June.

Tencent, on the other hand, is developing partners in its relatively unknown territory. The insurance strategy includes the internal platform WeSure, which acts as an intermediary between insurers and consumers, and Tendrop-Backed Waterdrop, which offers both traditional insurance and a rival to Ant's mutual aid product, Xianghubao.

During the first half of 2020, WeSure, Tencent's primary insurance company that sells through WeChat, paid out a total of 290 million yuan ($ 42.4 million). The unit does not disclose its amount of bonuses or earnings, but we can find clues in other numbers. 25 million people used the WeShare services in 2019, and the average award amount per user was over 1,000 yuan ($ 151). That said, WeShare didn't generate more than 25 billion yuan, or $ 3.78 billion in rewards, that year as the user base also makes up a good number of premium-free users.

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Going forward, it remains unclear whether Tencent will restructure its fintech operations in a more coherent and collaborative manner. Will investors and regulators ask for this as they expand? And what options are there for others to compete in a room that is dominated by two great players?

One thing is certain: Tencent needs to be more cautious on regulatory issues. Ant's performance is a win-win for entrepreneurs looking to “disrupt” China's financial sector, but the halted IPO, tied to regulatory issues and supposedly Jack Ma & # 39; s hubris, also alarms competitors that policymaking in China is moody can be.