Millions of US users to be hit by WeChat block

by AFP / pic by BLOOMBERG

WASHINGTON • Washington’s crackdown on WeChat will disrupt communications between millions of people in the US and their friends, families and business partners in China.

But the app had not managed to reproduce in the US its success in China as the dominant smartphone-based payments platform.

The US Commerce Department announced partial bans last Friday on WeChat, as well as video app TikTok.

The order will slow down WeChat to make it unuseable in the US for videochats with family and friends.

“They are slowing the speed to technically make it virtually impossible to use audio, video or send images,” said Wu Ziyi, a Chinese graduate student in political science at the Massachusetts Institute of Technology.

In China, WeChat took the country toward cashless commerce in just a few years, and it is used by hundreds of millions for everyday payments.

It is a kind of universal app, a digital bank account and identification card, for ordering food or a car, sending gifts, managing medical issues and interfacing government services.

Owned by technology giant Tencent Holdings Ltd, WeChat in the US has around 19 million active daily users, said Adam Blacker of Apptopia, a mobile apps consultant.

“It’s mostly used by Chinese visiting or working here or by Chinese-Americans staying in touch with their relatives,” said William Reinsch of the Centre for Strategic and international Studies in Washington.

That includes several hundred thousand Chinese students in the US, who use it for “at least 90%” of their daily online conversations, according to Wu.

He said it can be used to exchange small amounts of money.

But it cannot be connected to a US bank account or credit or debit card because it only works in Chinese yuan.

US businesses also use WeChat for communications with Chinese suppliers, and can possibly use it for payments, though other services — like the Alipay function of Tencent rival Alibaba Group Holding Ltd — are better built to handle large sums and foreign exchange.

If US businesses do use its payments function, said Reinsch, “I haven’t heard of anybody complaining that they might be stopped from doing that”.

Now, under the Commerce Department order, WeChat cannot be used for transferring money inside the US.

Reinsch said US businesses were mainly concerned that the long flagged crackdown would apply to use of WeChat outside the US, which would hamstring their China businesses.

That usage appears to still be allowed.

WeChat did once try to break into the US payments market, but made few inroads due to resistance by banks and merchants, regulations that favour credit and debit cards over digital wallets, and stiff competition.

In 2018, the company declared its WeChat Pay app was poised to take off, especially in brand-name shops where Chinese tourists abound, hoping to leverage that for a broader expansion. — AFP