Chinese Internet companies like Ant Financial Services Group and Baidu are sending out virtual red envelopes filled with cash for this year’s Spring Festival, according to a report by China Daily.
Ant Financial Services Group, Alibaba Group Holding's Internet finance arm, will specifically hand out envelopes worth approximately several hundred million yuan on the eve of Spring Festival through the Alipay Wallet app.
All Alipay Wallet users need to do is to pick red envelopes on their smartphones during the broadcast of the annual CCTV Spring Festival Gala.
"Every round of red envelopes will contain 100 million yuan ($15.2 million) in cash," Ant Financial Services Group announced. The number of rounds, however, wasn't disclosed.
Some of the red envelopes contain one of five virtual lucky cards. Individuals who are able to collect all five variants can share the grand prize of 200 million yuan.
These virtual red envelopes are also part of Alibaba's latest move to add some social networking appeal to the Alipay Wallet app, said Ma Tao, an analyst from Analysys International.
Meanwhile, e-commerce giants Tencent Holdings Ltd. and Baidu are also planning on expanding their presence in the mobile payments market by joining the campaign efforts.
Baidu is handing out red envelopes worth approximately 6 billion during the Spring Festival itself. Tencent, on the other hand, is investing hundreds of millions of yuan to boost its presence in the mobile payments market.
Virtual red envelopes first became popular back in 2014, when Tencent promoted such items on social media platform WeChat. WeChat reportedly has 650 million users every month.
Giving out virtual red envelopes with cash prizes is a means to gain advantage in China's growing mobile payments market, but actual red envelopes have always been a Chinese tradition.
"Giving out red envelopes is a nationwide tradition that can involve consumers in major cities and small towns, so it makes sense for Internet companies to sink significant investments into this," said Li Chao, an analyst at Bejing-based Internet consultancy firm iResearch Consulting Group, in an interview with China Daily.
In 2015, Tencent reportedly gained about 200 million mobile payment users after investing a staggering 500 million yuan in its virtual red envelope campaign.