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Facebook Wants to Replicate the Success of WeChat

2019-03-19 11:07 Tuesday

Facebook is reportedly developing its own digital currency, which is known as the Facebook Coin. The digital currency can be pegged to the U.S. dollar and allow users to transfer money through WhatsApp, which was acquired by Facebook in 2014 and became the company's largest acquisition ever. WhatsApp is the largest messaging service in the world with 1.5 billion monthly users. If Facebook's plan goes successfully, it may replicate the popularity of China's No.1 messaging APP WeChat.

Facebook Wants to Replicate the Success of WeChat

WeChat, owned by Tencent, boasts over a billion users. It can provide a range of services from mobile payments to book flights and even play games — all without leaving the app. Furthermore, it also has other financial services like wealth management and micro-loans. And that's why many analysts call WeChat as a "super-app".

One of WeChat's most popular features is known as WeChat Pay, which allows users to purchase goods online or to pay in physical stores by displaying a QR code on their phone screen. It's quite clear that Facebook is attempting to replicate the success of WeChat.

According to research firm eMarketer, penetration rate of mobile payment in China had reached 45% in 2018, compared with mere 20% in the United States. Chinese consumers skipped credit cards and jumped to mobile payment.

"The potential monetization for Facebook Coin may not be as diverse as WeChat Pay," said a senior analyst at market research firm iResearch.

"A large chunk of WeChat Pay revenues are generated from commission dollars from online shopping within WeChat and wealth management services, which I don't think Facebook would be able to tap into as the online shopping sector and wealth management sector are already mature in the U.S," the analyst added.

"I think Facebook Coin has a disadvantage in that the company still has a relationship of mistrust with many users, a hangover from the scandal of 2018. Trust is crucial to platform scalability and the success of new features," said Neil Campling, head of technology, media and telecommunications research at Mirabaud Securities.

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