WhatsApp’s biggest competitor is a solution that you may have never heard of: WeChat. WeChat, offered by a company called Tencent Holding (HKG: 0700), is the most popular messaging solution in China.
Currently, WeChat , or Weixin in Mandarin, has around 600 million users around the world, while WhatsApp has around 900 million . It is also easy to see why news reports indicate that WeChat is much more versatile, user friendly, and fun to use than WhatsApp.
Another reason why WeChat is so successful is that it is far more than just a messaging service. The best way to think of Weixin is as Uber, WhatsApp, PayPal’s Venmo, and Apple Pay all rolled into one.
So What Is WeChat Anyway?
Using WeChat, a Chinese person can send money to her family, call for a cab, send a message to her boyfriend, send a video to her girlfriend, and pay for a drink from a vending machine. Users can also post news stories, read the latest news, and play mobile games.
Many American companies, including PayPal, Apple, Facebook, and Google, are trying to copy some of WeChat’s capabilities because of the money it makes. Apple has brought out its own payment solution called Apple Pay, PayPal now owns the popular money transfer app Venmo , Google has launched its own messaging service and payment solution, and Facebook bought WhatsApp for $19 billion. Not to be outdone, the Korean electronics giant Samsung has released its own product, called Samsung Pay.
The reason these companies are so interested in copying WeChat is obvious: It makes a lot of money. Business Insider reported that Tencent made $1.1 billion in a year by processing WeChat money transfers. Foreign Policy reported that Tencent values WeChat at $30 billion and estimates that it makes up to $95 off of every customer, while Facebook only makes $42 off of every user.
WeChat vs. WhatsApp
Another good way to think of WeChat is like Google—a platform that allows a user to do a lot of things through a phone, just as Google lets you perform many different tasks through its search engine.
WeChat can also be viewed as the future of WhatsApp; it is what solutions like WhatsApp and Facebook Messenger will look like in a few years. It is obvious that Facebook CEO Mark Zuckerberg would like to transform WhatsApp into something like WeChat. Something to remember is that Zuckerberg, whose wife is of Chinese descent, spends a lot of time in China and even speaks Mandarin, so he is very familiar with WeChat and its capabilities.
Observers have noted that WeChat has some other advantages over WhatsApp; it appears to be more private than the American service. A popular feature is WeChat privacy circles that allow people to chat only with those they want, such as friends or business partners. Unfortunately, it is easy to gain access to circles by impersonating somebody.
Yet another popular feature on WeChat is its restrictions; a WeChat user can only be messaged by people he or she has invited. Unfortunately, cybercriminals can easily circumvent that security measure by impersonation.
Finally, many people prefer WeChat because it is simpler than WhatsApp and easy to use. WhatsApp, like a lot of American solutions, is needlessly complex. It sometimes betrays its roots as the creation of Silicon Valley math geniuses.
WeChat’s Achilles Heel—Security
Despite its popularity, WeChat has some serious weaknesses that could make it less popular around the world. The biggest of these is the Chinese government, which could be using it as a surveillance tool.
According to some online conspiracy theories, China’s security services are monitoring WeChat conversations. A few observers even think that Chinese and other WeChat users outside the country could be under surveillance.
If these claims are true, WeChat has serious privacy and security problems. The same features used by Chinese security services could be used by other nations’ spy agencies, particularly the American National Security Agency, or NSA, and the British Government Communications Headquarters, or GCHQ.
To make matters worse, it would be a simple matter for hackers and other cybercriminals to commandeer the surveillance tools in WeChat for their own nefarious purposes, such as blackmail. The amount of money moved through WeChat will certainly attract criminals.
Beyond surveillance, the Chinese government blocks Facebook use in that country. That creates a sort of captive market for WeChat, which means it does not compete directly with its biggest rival on its home turf.
Is WeChat WhatsApp’s Future?
Those that want to see what WhatsApp might look like in the near future need to take a close look at WeChat. Facebook is trying to mimic many of the Chinese solution’s capabilities.
As noted above, Facebook is working to commercialize WhatsApp. One of the best ways to achieve that would be to add a money transfer service similar to PayPal or Apple Pay to it.
WeChat has already demonstrated the power of such an app. There are now videos online that show people buying snacks from vending machines using WeChat. Some Coca-Cola vending machines in the United States now take Apple Pay.
Another U.S. payment app called Current C , which is being developed by large retailers, including Walmart, Costco, and Kroger, could allow users the ability to pay for fuel directly at the pump with an app. Current C is presently being tested at a number of retail stores in Columbus, Ohio.
Both Current C and Apple Pay have another feature that could be added to WhatsApp at some point in the future. Both apps can be integrated with the popular loyalty card programs offered by many American retailers. Kroger , which operates several large supermarket chains in the U.S., including Ralph’s, Harris Teeter, and King Soopers, gives customer one point for every $1 worth of groceries they buy.
Every 100 points a customer accumulates gives her a 10¢ a gallon discount on fuel at a Kroger-owned filling station. In addition to supermarkets, Kroger now owns and operates 2,000 filling stations in the United States.
One strong possibility is that people will be able to access loyalty points and make payments through WhatsApp at some point. Another is that they will be able to order products directly through WhatsApp much as they can order products through Amazon.