“Hongbao”, or Chinese red envelopes filled with money, are traditionally considered an excellent gift during the Lunar New Year in China, but this year there seem to be fewer gifts of hard cash, resulting in less red envelopes. Instead, what is more often used these days is virtual hongbao.
Millions of Chinese people – the majority of whom are from the younger generation – are now using their smart phones to send small amounts of money through WeChat, the most popular social network in the country with over 650 million users, or Alipay, the financial arm of e-commerce giant Alibaba.
Last Sunday, on the eve of the Lunar New Year, 8.08 billion digital hongbao transactions on WeChat were recorded, eight times more than last year, according to data from the technological Chinese company Tencent, the creator of the social network.
The Chinese have a habit of giving envelopes full of cash to relatives on special occasions such as weddings or births, although neither generates as much excessive indulgence as the Spring Festival – a name which also refers to the Lunar New Year.
Family, friends and even co-workers participate in this tradition that has now been modernized by technological advances.
Tencent first digitized hongbao two years ago as a strategy to promote the system of virtual payment.
In 2014, during the western New Year’s Eve celebration, 20 million virtual red envelopes were recorded on WeChat, and the number increased to 1 billion last year.
These figures, however, are minimal compared to what was recorded last Sunday.
Shen Huahua, a 23-year old Beijing resident, tells MLM she has sent many hongbao to her friends via WeChat this year.
“If you get money the regular way, it becomes a little embarrassing because you need to receive it personally. But if you send it by WeChat, it is not so awkward,” Shen explains.
“Also, sometimes we cannot see the person whom we want to give a hongbao to, so digital gift-giving is more suitable,” she adds.
To send these virtual gifts, one only needs to link a bank account to the smart phone application.
But the money-making potential of the digital hongbao goes far beyond the advantages of convenience that the virtual red envelope-giving provides to young people.
The popularity of the gift allows the companies to attract new users to the virtual third-party payment platforms which can be used, for example, to pay bills in restaurants, movie tickets or taxi fares through mobile phones.
Baidu, the makers of the leading Chinese search engine (considered the equivalent of Google in China) this year launched its own version of the virtual red envelopes, since its digital payment system was losing ground to those of its competitors, Chinese internet giants Alibaba and Tencent.
Alipay, which is linked to Alibaba, in 2016 reached an agreement with the state television CCTV, for its platform to become the latter’s official hong bao payment system during their New Year’s gala.
Alipay is the most popular third-party payment platform in China but when it comes to hongbao, it bows down to Tencent which has become the most used system for sending the virtual envelopes because of Wechat’s promotion.
Oblivious to these corporate disputes, many young people have joined the fad of giving virtual red envelopes as if it were a game, as WeChat offers a tool called “lucky money” which sends a hongbao to a group of friends and then randomly splits the amount among the recipients.
“Many times we put small amounts and we use it for ‘lucky money’, which is fun,” says Shen.