Invigor signs expansive deal for China’s largest payments platform WeChat

Invigor ASX IVO China payment platform WeChat Pay Tencent
WeChat has over one billion users, mainly in China and SE Asia.

Data analytics company Invigor (ASX: IVO) has struck a potentially money-spinning deal with Winning Group, a partner of China’s most prominent tech company Tencent – a company that’s currently worth 3 trillion yuan (A$600 billion) by market capitalisation.

One of Tencent’s major success stories has been WeChat, a Chinese multi-purpose messaging, social media and mobile payment app developed by Tencent in 2011.

Within 7 years, the application became one of the world’s largest standalone mobile apps and attracted 1 billion active users, many of whom are based in China and further afield in Southeast Asia.

Invigor has announced it has signed a binding memorandum of understanding to market and enhance the WeChat Services platform in Southeast Asia, and according to Invigor’s CEO Gary Cohen, the excellent working relationship that has been developed between Invigor and Winning Group means the company is now “focused on a very quick deployment.”

WeChat and commerce

The agreement means Invigor’s Loyalty solution product will be integrated into the WeChat platform.

Importantly, WeChat is a favourited platform used by travelling Chinese tourists and shoppers, using the service to conduct international payments and remittances.

WeChat user statistics 2018
WeChat statistics in 2018.

Invigor has said it intends to use its established Asian operations to introduce new merchants to WeChat Pay and therefore move into a position where the emergent data analytics company can generate growing recurring revenues within the fastest growing region in the world.

According to the MoU, the two companies will collaborate for an initial period of 36 months including a 3-month pilot program, before deciding whether to extend or amend the terms of the deal.

To commence their working relationship, the two companies have said they intend to kick-off by executing an initial project to be implemented in the coming months in Singapore and Hong Kong.

Generating revenue through WeChat

As part of the deal announced today, Invigor said it will earn revenue in three distinct ways.

Firstly, Invigor will earn a percentage of transaction revenue, currently estimated to be around 0.5% from merchants using WeChat Pay when introduced or acquired by Invigor. Given the relatively small transaction values, Invigor hopes to generate a large volume of transactions and thereby create a significant income stream from the deal with Winning Group.

Secondly, Invigor will earn advertising revenue when either party initiates a marketing or promotional campaign with a merchant. Finally, Invigor will generate transaction fees from merchants based on sales revenue when Invigor’s Loyalty solution is deployed.

“There can be absolutely no doubt that this MoU is groundbreaking for Invigor and integrates our highly regarded Loyalty solution into one of the world’s fast-growing and most recognised global payment and transaction platforms,” said Gary Cohen, CEO of Invigor.

In China, WeChat has entered the consumer market to challenge the traditional state-backed banks such as Bank of China and China Construction Bank, by providing payments and transfer services at far cheaper rates.

Very quickly, the platform has attained an 80% market share in online payments in less than a decade. Industry figures show that WeChat Pay processed US$1.2 trillion in 2016 and is reportedly responsible for 34% of China’s entire web traffic each year.

“This is truly a unique and an exceptional opportunity to grow our revenue on the back of the many millions of users that WeChat and Tencent will provide us. Our technology can be integrated seamlessly into the WeChat ecosystem which gives us a walk-up start to the potential of millions of users of the WeChat platform in southeast Asia.”

“Our goal during this initial three-month period is to secure merchant agreements, initially in Singapore and Hong Kong, that recognise the obvious benefits of being part of the WeChat ecosystem. We have a large footprint of merchants and relationships in Asia that we are now approaching,” Mr Cohen added.

George is an award-winning market analyst who has authored articles and editorial opinion pieces for multiple publications around the world. He has written about a wide variety of topics including financial markets, stocks, trading, politics and economics.