Waterdrop, one of China’s most popular online fundraising platforms, announced early this year that the platform will add a 3 percent service charge (no more than 5,000 yuan) for a single fundraising project on a pilot basis in some selected cities. Along with the channel fee (around 0.6 percent) deducted by third-party payment platforms, users need to pay Waterdrop 3.6 percent of the total amount of money raised.
The purpose of charging service fees is to maintain the daily operation of the platform and user services to eventually achieve sustainable development of the company, China Philanthropy Times reported.
There’s always been a channel fee deducted by the third-party payment provider since the launch of Waterdrop, but this cost was borne by the platform prior to January 2020, said Hu Yao, co-founder of Waterdrop and general manager of the company’s Medical Business Group.
Since then, Waterdrop no longer pays the 0.6 percent channel fee for its users. The 3 percent service fee charged by the platform, however, has recently been trialled in a number of pilot cities as a way to gather user feedback for the “continuous improvement of the platform”.
The service fees charged by Waterdrop are mainly used to pay the costs incurred by the fundraising service, including the development and maintenance of the platform, the salaries of fundraising consultants and other operation-related costs.
Reasons for the pilot program may include the shutdown of Waterdrop Mutual Aid, which provided the company with a source of management fee revenue, and the fall in the company’s share price due to several consecutive quarters’ losses after the firm went public in May 2021, the Philanthropy Times reported.
In the past few years, Waterdrop was able to advertise its insurance products to attract users to buy its products, with the money helping to subsidize the platform. But last year, a series of strict regulatory policies towards the online insurance industry made it harder for the company to cover its operating costs by selling insurance products.