Payments have shifted away from cash to QR codes and instant transfers. You know those red envelopes you might get during Chinese New Year — the ones symbolising good wishes and prosperity? Well, they’ve gone digital as well.

In eastern culture, cash is placed in red envelopes and are given to friends and family during special occasions such as Chinese New Year. Virtual red envelopes are a modern take of this tradition, allowing people to send and receive money through mobile apps and online services. Virtual red envelopes have become popular not only in China but also globally. It is an easy, efficient and convenient way of giving gifts to loved ones, especially in the era of digitalisation.

It all started in 2014 when the Chinese messaging app WeChat introduced the ability to gift virtual red envelopes of money to contacts and groups through its payment platform. It instantly became a smashing hit! WeChat reported over one billion virtual red envelopes exchanged in 2015 alone.

Why are Virtual Red Envelopes so Popular?

Graph retrieved from:

The graph above displays the amount of virtual red envelopes exchanged on the two most popular Chinese online platforms, Alipay and WeChat. Virtual red envelopes have taken the world by storm only a few years after being first introduced because anyone with a mobile phone can easily send one.

1. Easy To Keep Track🔍

Remember the days of counting every single coin and bill from envelopes, but never getting it right the first try? With these apps, you can easily budget and allocate your red envelopes with no hassle. It’s so much more efficient with no room for human error. No more counting coins for hours on end.

2. Easy to Send and Receive🔃

Going to the bank or ATM to withdraw the money is probably the worst part about preparing red envelopes — Counting every single bill and coin, stuffing them into little red envelopes one by one. It’s a tedious and time-consuming process. By making it entirely cashless, there’s no need to make trips to the bank!

3. The Law of Reciprocity🎁

A study online showed that gifts are powerful tools to strengthen bonds between people. They’re a viral sensation on its own! When someone sends you a red envelope, you feel compelled to send one back to them. And before you know it, everyone is sending red envelopes left and right. It’s a virtual gift-giving chain reaction, and it’s part of what makes virtual red envelopes so popular.

4. Safer From Theft🔒

Chinese new year is the season of pickpockets. Having a big wad of cash lying around, just waiting to be stolen is risky. But, thanks to virtual red envelopes, you don’t have to worry about any of that. You can keep all your money in a digital medium, safe from thieves. There will be less grieving children on the streets this holiday season.

How Virtual Red Envelopes Work


Sending a virtual red envelope is as easy as making any ordinary payment through your bank app. You can either scan a QR code (where the money is already preloaded) or transfer it through electronic fund transfer systems.

And on WeChat, it’s even more straightforward. You can send monetary gifts in the form of ‘credits’ to other users on the app. These credits will be deposited into their WeChat Pay account, which acts like a digital wallet. They can use it to make purchases or withdraw money into their personal bank account. It’s that simple and easy to use.

Red Envelopes 🚫 Red Letter Day

While virtual envelopes are safe from theft, it is not safe from online fraud.

As with any new technology, bad actors will always try to exploit it for their own gain. Unfortunately, virtual red envelopes are no exception, and fraud cases have risen over the years.

For example, some users have received suspicious links claiming they’ve received a virtual red envelope from a friend. But, when clicked, they’re prompted to give away personal information used to access their bank account.

Some victims were asked to download a program to claim the virtual red envelope, which turned out to be key loggers or fake banking apps. Entire savings were transferred out of their accounts the following day.

Another case involves a shop owner who ran a business on the Chinese online shopping platform, Taobao. He received a call from someone claiming they were from “Taobao’s customer service”, encouraging the victim to take part in a “shared red envelope activity” in which other shops were supposedly already participating. The victim agreed to let the customer service representative take remote control of his computer to set up the program. US$1301.90 went missing from his bank account the following day.

Red Flags & Best Practices

Though these red envelope frauds are becoming more rampant, it is possible to spot them early on and to take preventive measures to avoid being a victim. Here are some warning signs to look out for and how to approach them —

  • Red Flags:
    • Suspicious links, files, and text messages sent by strangers
    • Requests for personal information, such as login details, passwords, and account numbers from strangers claiming to be service representatives
    • Online services involving money that are not officially recognised or endorsed by a trusted company
  • Best Practices:
    • Avoid opening any suspicious links, files, or texts
    • Avoid revealing personal information to strangers
    • Be cautious of any online service involving money, especially if it seems too good to be true
    • Rotate passwords regularly
    • Install firewalls to help identify suspicious activity and take preventive action

Innov8tif’s Role in Combating Fraud

As we approach Chinese New Year, it’s important to remember that virtual red envelopes, while convenient, can also be a target for fraud and scams.

Innov8tif would like to remind users to be vigilant and aware of potential risks when using virtual red envelopes. By following the practices above, we’re able to protect ourself, as well as our friends and family..

To gain a deeper insight into how to protect yourself and your loved ones from being exploited, feel free to have a look at our other articles on the different types of fraud below.

Let’s work together to make this Chinese New Year a safe and happy one for everyone. Finally, Happy Chinese New Year to all our readers!

About Innov8tif

Innov8tif is an ISO 27001:2013 certified AI and software technology company, specialising in ID Assurance Solutions and eKYC services. Founded in 2011, we currently have a regional footprint in ASEAN serving local governments, telecommunication companies, BFSI (banking, financial services & insurance) industries and the fintech market. In 2019, EMAS eKYC was accorded one of the two Merit awards for B2B Fintech category at International APICTA (Asia Pacific ICT Alliance) Awards among 16 participating economies.

For more information about our solutions, get in touch with us at [email protected]