Tencent Invests in Easy Transfer for Cross-Border Payments

Tencent Invests in Streamlining Overseas Tuition Payments

A new investment from Tencent aims to alleviate the difficulties faced by Chinese students studying abroad when making tuition payments. The internet services giant has acquired approximately 5% ownership in Easy Transfer, a startup focused on simplifying this process.

Details of the Investment

While Tencent has not publicly commented on the matter, Easy Transfer’s founder and CEO, Tony Gao, confirmed the investment to TechCrunch. This funding, finalized in December, represents the initial portion of Easy Transfer’s current Series C funding round. Early backing for the startup came from IDG Capital and ZhenFund.

How Easy Transfer Simplifies Payments

Easy Transfer doesn’t directly process transactions. Instead, it collaborates with financial institutions holding the necessary cross-border payment licenses within China. Gao previously explained that the company’s primary benefit lies in making international money transfers significantly easier.

Traditionally, students and their parents were required to visit banks, complete extensive paperwork, and carefully verify routing details before anxiously awaiting the funds to arrive at the university.

The Cost of Convenience

Utilizing Easy Transfer involves completing a simple online form, with the startup managing the remainder of the process for a fee of up to 200 yuan (approximately $31).

WeRemit: A Joint Venture with WeChat

Through this strategic investment, Easy Transfer intends to enhance its user experience further. A WeChat-based tuition remittance service, named WeRemit, has been jointly developed by the two companies.

Unlike many third-party mini-programs within the WeChat ecosystem, WeRemit benefits from partial operation by WeChat itself, receiving substantial support from the messaging platform.

Enhanced Security and Risk Management

“WeChat significantly improves the security of cross-border payment transactions through measures like anti-money laundering protocols, identity verification, and robust information security,” stated Gao. “The extensive user data held by WeChat enables the creation of a risk management system that surpasses the capabilities of even traditional banks.”

Identity Verification and AI-Powered Compliance

Before processing any funds, WeRemit employs facial recognition to verify user identities and collects personal information already stored within WeChat. This practice aligns with Chinese regulations requiring real-name verification for core features like mobile payments and content publication.

WeChat’s AI-driven financial compliance system also plays a crucial role. Machine learning algorithms analyze submitted documents – including tuition bills, acceptance letters, and visa information – to identify and understand their content.

The system can also identify potentially high-risk transactions for manual review and ensure accurate payment amounts, preventing overpayments.

Leveraging Tenpay’s Infrastructure

WeRemit’s operations are supported by Tenpay, Tencent’s online payments division, which also powers WeChat Pay. Upon receiving funds from users, Tenpay – possessing a cross-border transaction license – transmits the money to one of the 2,000 universities that currently accept Easy Transfer.

Expanding Reach Through WeChat

Partnering with WeChat, a dominant platform in China, is expected to significantly broaden Easy Transfer’s reach. The startup served 120,000 students in the past year, processing over $2 billion in transactions. It is now focused on reaching the 500,000 WeChat users identified as “overseas students.”

Approximately 700,000 Chinese students pursued education abroad in 2019, according to data from the Ministry of Education.

Strategic Implications for Tencent

This partnership with Easy Transfer allows Tencent to diversify its portfolio of cross-border fintech services, extending beyond services targeted at outbound tourists. Gao envisions expanding Easy Transfer’s model throughout Asia, particularly in South and Southeast Asia.

He believes that families in countries like India, Nepal, and Vietnam face similar challenges with tuition transfers and are even more sensitive to pricing.

Future Expansion and Collaboration

Tencent has historically relied on strategic investments to expand its international influence, as demonstrated by its extensive portfolio of video game companies and investments in fintech providers like Grab. Gao suggests that Tencent could facilitate Easy Transfer’s expansion by connecting it with suitable local partners possessing the necessary licenses for international money transfers.

Easy Transfer will then concentrate on building local teams and developing user-friendly products, similar to WeRemit.