Tencent has invested in Easy Transfer, a startup that aims to make tuition payments less stressful for hundreds of thousands of overseas Chinese students.
Tencent declined to comment on the story, but Tony Gao, founder and CEO of Easy Transfer, told TechCrunch the internet giant now owns about 5% of its business. The investment, which closed in December, is the first tranche of Easy Transfer’s ongoing Series C funding round. IDG Capital and ZhenFund are the first investors in the startup.
Easy Transfer itself does not handle transactions directly; instead, it works with financial institutions that have cross-border payments licenses in China. The added value of the startup, Gao said in a previous interview, is to facilitate remittances. In the old practice, parents and students had to go to a bank, fill out a stack of forms, check that the routing information was correct, and wait nervously for tuition to be deposited in the student’s account on time. ‘university.
With Easy Transfer, users fill out a simple form online and the startup takes care of the rest for a fee of up to 200 yuan ($31).
With Tencent’s strategic investment, Easy Transfer hopes to further streamline its user experience. The partners have jointly developed a WeChat-based tuition rebate service called WeRemit. Unlike millions of lightweight third-party apps in the WeChat ecosystem, WeRemit is partly operated by WeChat with deep support from the messaging giant.
“From anti-money laundering to identity verification to information security, WeChat makes cross-border payment transactions much more secure,” Gao said. “The gargantuan amount of user data held by WeChat allows it to build a robust risk management system that even banks cannot match.”
Before moving money, WeRemit will ask to scan users’ faces to confirm their identity and collect their personal information, data that is already stored on WeChat. Internet platforms in China are required to verify people’s true identities before enabling essential features such as mobile payments and content publishing.
WeChat’s AI-powered financial compliance system is also at work. Machine learning is used to identify and understand documents submitted to WeRemit, such as tuition invoices, offer letters, and visa information. The system can also flag high-risk transactions for manual review and compare amounts billed to amounts due to avoid overpayments.
WeRemit’s service is powered by Tenpay, the online payment arm of Tencent which also powers WeChat Pay, the messenger’s digital wallet. Upon receiving transactions from users, Tenpay, which holds a cross-border transaction license, sends the money to one of the 2,000 universities that accept Easy Transfer.
Teaming up with WeChat, which has a ubiquitous presence in China, could dramatically amplify Easy Transfer’s reach. The startup served 120,000 students last year and processed more than $2 billion in transactions, according to Gao. It now targets the 500,000 users WeChat describes as “international students”. A total of about 700,000 Chinese students studied abroad in 2019, according to the Ministry of Education.
For Tencent, a partnership with Easy Transfer could help diversify the scope of its cross-border fintech services beyond targeting outbound tourists. Gao wants to replicate the Easy Transfer model in the rest of Asia, particularly in South and Southeast Asia. The plan is to capture the growing population of international students in countries like India, Nepal and Vietnam. Families in these countries have the same tuition transfer issues and are even more price sensitive, the founder said.
Expanding overseas has proven difficult for Tencent, and the company has relied heavily on strategic investments to expand its influence overseas. For example, its massive portfolio of video game companies. Tencent had backed several fintech service providers across Asia, including Grab. Tencent could pair Easy Transfer with the right local partner with the necessary license to send money overseas, Gao said, and Easy Transfer will focus on building a local team and an easy-to-use product like WeRemit.