Happy New Year! Now show me the money! Or to put that another
way: 新年快樂 恭喜發財 紅包拿來！
This popular saying gets a major workout around Lunar New Year,
when Chinese traditionally hand out bright red envelopes, called
hongbao, stuffed with crisp yuan notes, to friends, family and
colleagues.
This year, many young Chinese are putting a digital twist on the
old custom, gifting electronic red envelopes using services
launched by two giant Chinese tech firms, Alibaba (BABA, Tech30)
and Tencent(TCEHY).
"It's much more convenient ... the lines get quite long around
Chinese New Year at the bank," said Mao Hui, 27, who lives in
Shanghai. Plus, "traveling with cash isn't always the safest,
especially if you have to take the train."
Here's how it works: Gift givers link up to the digital hongbao
features by adding a payment option, like a bank account. Once
connected, users can directly transfer hongbao money gifts through
Tencent's popular WeChat messaging app, or Alibaba's Alipay payment
affiliate.
Gift receivers also have to connect their bank accounts to get
their hongbao, which means Alibaba and Tencent are getting a fresh
wave of mobile customers. Users that sign up for mobile payments on
WeChat, for example, can then access a suite of e-commerce services
and products, such as a taxi-hailing app.
Experts say the digital hongbao features have caught on in part
because they're fun. In Alibaba's network, users can play lottery
games that pay out cash or coupons that can be used on the
company's shopping sites. On WeChat, users can gift money to a
group of friends, letting the app randomly decide who gets the
money.
The two companies are in a race to capture market share --
WeChat's digital hongbao feature launched to great fanfare last
year with users sending millions of electronic red envelopes,
leaving Alibaba scrambling to catch up.
"For Alibaba, this is mainly a defensive move," said Nicole Peng
at Canalys, a tech research firm. But it has helped boost Alibaba's
social network, Laiwang, as users share their status and
experiences on the platform.
Alibaba said Thursday that 1.72 billion digital envelopes have
been exchanged using Alipay since Feb. 11.
Money-stuffed physical envelopes remain the most popular gift
among Chinese for holidays and other hallmark occasions -- getting
married, having a baby, starting a new business, and even at
funerals.
Going forward, Peng expects more digital hongbao gifts for
Chinese New Year and other big gift-giving events.
"It's giving people ideas how to handle the money," she said. "A
lot of Chinese work in the city and live away from their family ...
it's easy to transfer money like this as a gift."
For Mao, sending digital hongbao has freed up some extra time
during the busy holiday season.
There's just one catch -- she still can't gift her elders
electronically. "The older generation, they just don't use these
things," she said.
CNNMoney (Hong Kong)