Apple and Tencent reach deal to again let WeChat app users tip each other

As part of the deal, first reported in the Wall Street Journal, Tencent will revamp the tipping system in WeChat to send tips directly to individuals. WeChat is the most popular messaging app in China.

“In the past, companies like Apple might have had a difficult time understanding China-specific features,” said Tencent executive Alan Zhang in the report. “We now all share a mutual understanding, and we’ll soon bring back the tip function.”

In China, in-app tipping is a popular way to compensate content creators, however, Apple has been wary of third-party payment systems — causing the company to ban them in May 2017. One month after restricting in-app payments that bypassed the App Store payment mechanism, the company updated its policy to allow tips through in-app purchases. The only problem for Tencent is that Apple takes a 30 percent cut of in-app purchases. In September, Apple again updated its policy to allow users to gift each other money without Apple taking a cut — though those gifts could not be related to accessing content or services.

The terms of the agreement are currently unclear. It’s not known if Apple will still take a cut, but just a smaller one, or if it won’t be taking a cut at all. It’s also unclear exactly when tipping will be re-enabled on iOS, though Tencent likely wants to bring it back soon.

Apple is a growing presence in China, and China has become a hugely important market for Apple. In-app purchases are a pretty big source of revenue for Apple, especially in China — in the fourth quarter of 2016, Apple reported a hefty $2 billion from in-app purchases in China alone, and that was after a market share dip for the company in China.