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 for the story, but Tony Gao, founder and CEO of Easy Transfer, told TC that the internet giant now owns about 5% of his company. The investment, which closed in December, is the first tranche of Easy Transfer’s ongoing Series C funding round. IDG Capital and ZhenFund are early investors in the startup.
Easy Transfer itself doesn’t handle transactions directly; instead, it works with financial institutions with cross-border payments licenses in China. The startup’s value-add, Gao said in a previous interview, is to make remittance hassle-free. In the old practice, parents and students would need to visit a bank, fill out a stack of forms, double-check the routing information is correct and nervously wait for the tuition to deposit in time into the university’s account.
With Easy Transfer, users fill out a straightforward form online and the startup takes care of the rest for a fee of up to 200 yuan ($31).
Through Tencent’s strategic investment, Easy Transfer hopes to further streamline its user experience. The partners have jointly developed a WeChat-based tuition remittance service called WeRemit. Unlike the millions of third-party lite apps inside WeChat’s ecosystem, WeRemit is partly operated by WeChat, with deep support from the messaging giant.
“From anti-money laundering, identity verification, to information security, WeChat makes cross-border payment transactions much more secure,” said Gao. “The gargantuan amount of user data owned by WeChat allows it to build a robust risk management system that even banks can’t match.”
Before moving money around, 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 identity before enabling core features like mobile payments and content posting.
WeChat’s AI-based financial compliance system is also at work. Machine learning is used to identify and comprehend documents submitted to WeRemit, like tuition bills, offer letters and visa information. The system can also flag high-risk transactions for manual review and compare billed amounts to the due numbers to avoid overpayment.
Undergirding WeRemit’s service is Tenpay, Tencent’s online payments arm that 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 accepts Easy Transfer.
Teaming up with WeChat, which has a ubiquitous presence in China, could greatly amplify Easy Transfer’s reach. The startup served 120,000 students in the past year and processed more than $2 billion in transactions, according to Gao. It’s now targeting the 500,000 users that WeChat tags as “overseas students.” In all, around 700,000 Chinese students studied overseas in 2019, according to the Ministry of Education.
For Tencent, a partnership with Easy Transfer could help diversify its breadth of cross-border fintech services beyond targeting outbound tourists. Gao wants to replicate Easy Transfer’s model in the rest of Asia, especially South and Southeast Asia. The plan is to capture the growing population of overseas students in countries like India, Nepal and Vietnam. Families in these countries have the same pain points in tuition transfer and are even more price sensitive, said the founder.
Overseas expansion has proven challenging for Tencent, and the firm has largely relied on strategic investments to extend its influence abroad. Case in point is its massive portfolio of video games companies. Tencent had backed multiple fintech service providers across Asia including Grab. Tencent could hook Easy Transfer with the right local partner with the necessary license for sending money overseas, said Gao, and Easy Transfer will focus on building a local team and an easy-to-use product like WeRemit.
