Three years ago Chinese internet giant Tencent needed a way to break into mobile payments. Its rival Alibaba already dominated payments in China with its platform, Alipay. So in time for Chinese New Year, Tencent launched a digital version of hongbao, the ancient new year tradition of handing out red packets stuffed with cash. Now Google is hoping to get people in the UK to use its payments platform, Android Pay, by trying a British version of the Chinese trick: digital Christmas crackers.
Starting today, each time an Android user in the UK pays for something with Android Pay, Google will deliver virtual Christmas crackers that, when popped, may reveal gift vouchers for free coffee, movie tickets, or store credit. Besides the one-off goodies, Google is introducing virtual coins, which accumulate with every Android Pay-enabled tap at the cash register. Users who collect enough coins get discounts at coffee chain Costa. Trade publication Android Police previously discovered Google’s plans for a giveaway of some sort when it performed a routine teardown of the Android Pay code.
Tencent wasn’t the first to offer digital hongbao—competitors like Alibaba and Sina already had their versions—but it created a sensation by adding fun, game-like elements, such as randomly distributing the contents of a hongbao among a group of friends. One friend might get half the money while another got only a fraction. The launch, in January 2014, kicked off a gradual but steady growth in the use of Tencent’s Tenpay, which is now starting to challenge Alipay for dominance.
By now, each Chinese New Year is marked by hongbao wars as China’s payments giants try to outdo one another with ever more elaborate hongbao distribution mechanisms.
For Google, Android Pay is so far an also-ran in the mobile payments league, trailing far behind Apple Pay, which this summer claimed to have 75% of contactless payments volume in the US. Google declined to say how big Android Pay’s volume in the UK is.