WeChat, which is owned by Tencent Holdings Ltd, is willing to risk losing some of its 650 million monthly active users to competitors to achieve the long-term goal of dominating the mobile payment service market, according to industry experts.

On Monday, WeChat said in a statement that from March 1 it will begin charging users a fee of 0.1 percent for each transfer from the user's digital wallet to their personal bank accounts.

Cash transfers of up to 1,000 yuan ($150) will be free, but any transfer amount beyond that cumulative limit will incur a fee. The minimum charge for each transfer will be 0.1 yuan. Transferring money to friends or purchasing items with the app's digital wallet will remain free of charge.

WeChat said the move was not motivated by profit but as a means to cover mounting bank fees on transactions.

"WeChat has been covering the cost for users. With the growth of our business, costs have risen rapidly, making it difficult for us," it said in a statement.

It is the first among China's major mobile payment service providers, including Alipay Wallet, to charge a fee for small cash transfers. One netizen, who calls himself We Ke, posted on his Weibo, the Chinese version of Twitter, that he will be using Alipay for money transfers to avoid paying WeChat's fee.

Though analysts said the fee will likely send users running, Li Chao, an analyst at iResearch Consulting Group, said that's an exaggeration because it will be difficult to change people's habits.

"They may lose a few users, but the mobile payment market, especially the offline market, is something WeChat cannot afford to lose," Li said.

Other analysts said they expected WeChat to impose the fee. Payments with its digital wallet have been increasingly accepted by bricks-and-mortar shops, such as cinemas and convenience stores, and WeChat wants more widespread use of the service, they said.

Ma Tao, an analyst at Analysys International, a Beijing-based Internet consultancy, said that since WeChat is charging a transfer fee, more users will be using WeChat Wallet to make payments.

"WeChat has grown into a whole package, combining social networking with a variety of finance-related functions, from making payments to buying financial products. Introducing charges will help WeChat's position in the mobile payment market," he said.

But that challenge is steep. Alipay, the online payment arm of Alibaba Group Holding Ltd, accounts for about 70 percent of China's trillions of yuan in mobile payments. WeChat runs a distant second at 19.2 percent.

Li said WeChat can challenge Alipay if its digital wallet service becomes more widely accepted by bricks-and-mortar businesses.

"The offline payment market is much bigger than the online payment market," he said.

mengjing@chinadaily.com.cn

(China Daily USA 02/17/2016 page13)