Today reports have started to appear across the Chinese intranet indicating that in the next few days Tencent credit ratings will be available to check directly through QQ & WeChat. If correct that means we could soon be able to get a little glimpse into all the juicy financial data that Tencent has on WeChat users and their creditworthiness. This is a big step forward for Tencent, as a widely accepted online credit rating score system is key infrastructure currently missing in their arsenal of weapons to fight bitter rival Alibaba in China.
The internet giants of Alibaba and Tencent now own the primary customer touch points for digital retail banking services in China (Alipay + WeChat Pay). They have won the hearts of consumers by providing far superior, faster and more convenient services often for free. China’s state-owned banking oligopoly is too slow and unwilling/unable to disrupt themselves in order to compete. Ali and Tencent are acting like startups in this area as they are nimble and highly attuned to solving customer pain points (transparent credit rating being one of these). They understand internet business in a way state-owned banks do not. They also have the user base scale and the massive war chests needed to gain mass market adoption quickly and to continually subsidize their payment and banking services until unbreakable user habits are built and competition is destroyed.
A more developed and widely accepted credit rating system is essential for Tencent to build deeper and wider array of financial products and solving the issue of trust online. One of the key advantages for Chinese consumers of using Alipay over WeChat Pay is Alipay’s deep integration of their ‘Sesame Credit’ rating which provides an array of benefits for those with good credit scores.
Above: My rather abysmal Sesame Credit score
Credit rating services are essential for solving the issue of trust online and Alipay is considerably ahead of Tencent & WeChat in this area. The Bike-sharing war between Ofo and Mobike is a great example of the benefits that can be reaped. Once Ofo received investment from Alipay and was integrated into their app they received a huge benefit of being able to leverage Alipay’s Sesame credit score system. The credit rating resolves the need for deposits from users with respectable credit scores. This makes first-time users far more likely to take the plunge with trying one of Ofo bikes, as the main hurdle (the deposit) is now removed. Mobike backed by Tencent and WeChat currently had no such advantage, but that might be about to change…
For those of you who don’t know how to check your Sesame Credit score in Alipay. It’s More > Wealth Management > Zhima Credit (see picture below).
Tencent Credit Why now?
WeChat is currently gearing up their annual ‘August 8th Cashless Day’ promotions. What better way to celebrate the success of WeChat Pay and China’s steady and irreversible move toward a cashless society than to launch a new credit rating system.
Above: the Tencent Credit WeChat Official Account
How are Tencent Credit scores calculated?
Tencent credit scores are said to have a maximum of 850 points and minimum of 300 points. The ratings are based on 5 categories (same as Sesame Credit): Safety, Wealth, Social, Compliance, and Consumption.
Chinese credit rating systems are traditionally less developed than in most Western countries. This gap has allowed Alipay to capitalize and build one of China’s most widely accepted credit rating system (Sesame). Informally I’ve known from speaking with Tencent’s wealth management services team (Licaitong) nearly a year ago that something like this was in the pipe works. Honestly, I didn’t expect it to take this long to implement which proves how difficult it is to develop such a system. Tencent has a long way to make up ground on Alipay, looking forward to watching adoption rates and acceptance closely over the next year.