Tencent is developing a credit scoring system as it ramps up its battle with rival Alibaba for a share of China’s $5.5tn mobile payments market. Tencent now aims to launch a similar service, which likewise accounts for users’ social and financial histories to assess their credit risk.
Credit scoring is popular in China, especially among younger subscribers who lack a credit history but might be eligible for a high rating that would let them rent hotel rooms, bikes or phone chargers without leaving a deposit. The services are particularly valuable given the lack of access to credit cards in the country. Tencent is testing a credit scoring service among a small group of its subscribers, upping the stakes as the two tech titans engage in an aggressive promotion this week encouraging Chinese to forgo cash in favour of payments made with a swipe of the phone.
China is streets ahead of the rest of the world in mobile payments — its market is more than 50 times the size of the US — buoyed by a boom in online shopping and the dearth of alternatives such as credit cards. iResearch said China’s mobile payments hit $5.5tn last year, 50 times the size of the US’s $112bn market, based on Forrester Research figures.
The sector is dominated by the country’s two biggest tech groups. While Alibaba long commanded the lion’s share, it has recently been ceding ground to Tencent. Tencent’s share rose to 39.5 per cent in the first quarter of the year, according to data from consultancy Analysys, while Alipay dipped to 53.7 per cent. That compared with respective 16 per cent and 71 per cent shares seen in the third quarter of 2015.
Source: Financial Times