It is like the Internet frenzy all over again, all those companies chasing eye-balls by pouring tons of money into the venture. Who is going to pay for all the the infra-structure, R&D, marketing, and the rewards? During the Bubble, it was all about advertisement. For China, banking!
The mobile payment system in China is mature and sophisticated. Integrated with the chatting software, people can transfer funds to whomever with a fluidic swipe on their mobiles. Comes next month’s Chinese New Year, the “Fight for the Red Envelope” (æ¶ç´…包) game will generate billions within days.
Chinese traditionally give cash for any gifting occasion. Every kid has been trained to spot the red envelope which has long become the symbol for gift or bonus money. No occasion sees more red enveloping than the Chinese New Year festival. Companies, celebrities, and, of course, family members, offer a variety of red envelopes: plain old money, iPhones, deep discounted Groupons, gift cards, etc. The internet gave this tradition a couple of twists: the red envelope is now virtualized, the giver/receiver transaction happens on their respective mobiles, via the popular chat software WeChat. Secondly, the giver can set up a game to give a number of red envelopes to a group of people as the prizes for a competition. Whoever claims the envelopes first keeps them. It becomes a frenzy! Usually, the giver sends out a teaser chat: watch out in this forum for goodies. Then he or she send out the virtual red envelopes. All of the sudden, the chat room explodes with activities. Then the next round comes.
During the special TV show for the Chinese New Year last year, the emcee announced the next “red envelope” from the sponsor. People were glued to the TV, waited for the announcement, and fought to be one of the lucky winners. Same at the family level: grandpa will make 10 red envelopes of descending values for his 10 grandkids. Friends do the same and play the “pay it forward” game. Needless to say, billions of RMB changed hands.
PayPal, step aside.