Tencent’s WeChat Channels to Charge Merchants Technical Service Fees

Pony Ma, the founder, chairman and CEO of Shenzhen-based tech giant Tencent emphasized at a recent internal staff meeting that “WeChat (Video) Channels is the hope of the whole company,” and the short video platform has since made various moves to commercialize. On December 23, the firm issued an announcement to merchants joining the platform, saying that it would charge them technical service fees from January 1, 2023. The following content has been compiled from a report by Tech Planet on December 29.

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The new rules in the announcement mean that every time a merchant sells a commodity, it needs to pay a technical service fee to WeChat on the basis of “the actual amount paid by the Video Channels user (including freight) + payment subsidy.”

The announcement also mentioned that the rules are applicable to all merchants on the platform. Newly joined merchants will enjoy certain policy support. According to the regulations, new merchants who sign a contract to open a shop with a WeChat Channels number can enjoy the special preferential policy of “reducing the technical service rate to 1% with a transaction amount of less than 1 million yuan [$143,717]” within 30 days from the effective date of signing and opening a shop.

WeChat Channels also defines the applicable scope of the new regulations, the formula, base, time and method for settling technical service fees, as well as the rate standards for various goods or services.

The 61-page commodity category table lists three categories in detail, and clearly stipulates the corresponding rate standards of commodities in various categories, which are divided into several grades, such as 1%, 2%, 2.5%, 3%, 4% and 5%, most of which are between 2% and 5%. Among them, personal healthcare, clothing and underwear, outdoor sports, maternal and infant products and kitchen utensils have the highest service rate, reaching 5%.

Compared with other short video platforms, Kuaishou previously charged technical service fees to merchants from July 20, 2019, and Douyin charged 1%-10% technical service fees to merchants from February 1, 2020.

LatePost previously reported that the daily transaction volume for livestreaming businesses on WeChat Channels exceeded 100 million yuan for the first time in September this year. Based on this figure, the daily income of the platform in technical service fees can reach 2 million to 5 million yuan. With increasing transaction volume, there is significant room for growth in technical service fee income.

In financial reports of the past few quarters, the names of WeChat Channels have been mentioned more and more. Tencent‘s Q3 financial report released in November this year emphasized the revenue contribution of this division more than once. “Advertisers have strong demand for advertising flow on this platform, especially those in the fast moving consumer goods industry,” reads the report. “Ads on WeChat Channels are complementary to Tencent‘s existing ad business and brings incremental ad business revenue.”