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WASHINGTON: Washington’s crackdown on WeChat will disrupt communications between millions of people in the United States and their friends, family, and business partners in China.
But the app had failed to replicate in the US its success in China as the dominant smartphone-based payments platform.
The US Department of Commerce announced partial bans on Friday (September 18) on WeChat, as well as on the video app TikTok.
READ: Trump gives blessing to a deal to allow TikTok to continue operating in the US.
The order will slow down WeChat so that it cannot be used in the United States for video chats with family and friends.
“They are slowing down to make it technically impossible to use audio, video or send images,” said Wu Ziyi, a Chinese graduate student in political science at the Massachusetts Institute of Technology.
UNIVERSAL APPLICATION
In China, WeChat led the country to cashless commerce in just a few short years, and is used by hundreds of millions for daily payments.
It is a kind of universal application, a digital bank account and an ID card, to order food or a car, send gifts, manage medical problems and interact with government services.
WeChat in the United States, owned by tech giant TenCent, has about 19 million daily active users, said Adam Blacker of Apptopia, a mobile app consultant.
“It is used primarily by Chinese who visit or work here or by Chinese Americans who keep in touch with their families,” said William Reinsch of the Center for Strategic and International Studies in Washington.
That includes several hundred thousand Chinese students in the United States, who use it for “at least 90 percent” of their daily online conversations, according to Wu.
He said that it can be used to exchange small amounts of money.
But it can’t be connected to a US bank account or credit or debit card, and because it only works in Chinese yuan.
American companies also use WeChat to communicate with Chinese providers, and can possibly use it for payments, although other services, such as the Alipay feature of TenCent’s rival Alibaba, are better designed to handle large sums and currency.
If US companies use its payments feature, Reinsch said, “I have not heard of anyone complaining that they are being prevented from doing so.”
Now, per the Commerce Department order, WeChat cannot be used to transfer money within the United States.
Reinsch said American companies were primarily concerned that the long-standing crackdown would apply to WeChat use outside the United States, crippling their business in China.
That use seems to still be allowed.
DIFFICULT COMPETITION IN US
WeChat once tried to break into the US payments market, but made little headway due to resistance from banks and merchants, regulations favoring credit and debit cards over digital wallets, and stiff competition.
In 2018, the company stated that its WeChat Pay app was ready to take off, especially in branded stores where Chinese tourists abound, hoping to leverage that for wider expansion.
Gambling and tourism conglomerate Caesars Entertainment began accepting WeChat payments at restaurants, shops, and entertainment venues in Las Vegas, with the aim of helping Chinese tourists spend their money.
But with US-based rivals like Zelle, Venmo, and Apple Pay vying for the market, WeChat barely registered and Caesars appears to have abandoned it.
The company did not respond to a WeChat query.
Wu said Chinese in the United States could still find ways to use the app, through VPNs or other means, but most are already moving to other chat apps to communicate with families at home.
“My family is very traditional, so we will probably go back to the phone call,” he sighed.
