Tencent credit check takes mobile payments battle to Alibaba
Chinese mobile payments provider Tencent will create a credit scoring system to rival e-commerce giant Alibaba's Sesame Credit. Offered by Ant Financial, the payment arm of Alibaba, Sesame Credit uses data on customers' financial histories to judge their ability to pay back loans and other debts. Tencent will test a similar service before releasing it as part of its mobile payment services. Such credit scoring systems have become popular in China, where younger consumers lack a credit history that would enable them to pay for services such as hotel rooms without a deposit.
More scores that rate your trustworthiness are coming to China’s internet—which is great for a quick discount, but concerning for civil liberties.

Tech giant Tencent is gradually testing and expanding its “social credit” system that will give users a numeric rating based on their spending habits and social connections, two years after rival Alibaba launched its own social credit system. A source familiar with the matter this week confirmed that Tencent expanded its pool of “beta test” users for Tencent Credit, the name of its social credit system. The beta test users were given access to the service on QQ, a Chinese chat app.

Advertisement

According to media reports (link in Chinese), users must input their real names and Chinese ID numbers to reveal their scores, which ranges between 300 and 850. The company breaks down that score into five sub-categories: social connections, consumption behavior, security, wealth, and compliance. It’s very similar to Sesame Credit, the social credit system run by Alibaba affiliate Ant Financial, which was launched officially in 2015.

Tencent did not respond to Quartz’s inquiries about how its scores were calculated and how data for these categories was extracted.

For both Tencent and Alibaba, there are several incentives to launch social credit schemes. For one, China’s consumers are massively underserved in the financial sector—most financial services cater to large businesses, and no credit rating company has achieved ubiquity for individuals. It’s also a marketing opportunity—users who spend more time or money on Alibaba and Tencent services can increase their scores and get benefits. For example, Ant Financial recently launched a scheme with Ofo, a popular bike-sharing company, allowing users to ride bikes without first paying a deposit.

In the past two years, Tencent’s share of China’s mobile payments has skyrocketed thanks to swift adoption of WeChat payments, at the expense of Ant Financial, once the dominant online payments provider through the Paypal-esque Alipay.

Advertisement

But there’s also a political component to social credit scores in China. Beijing has urged local governments and private companies to develop a social credit system, both to address underbanked citizens and to determine who is qualified to get loans, and also to “encourage trust.” Tencent and Alibaba were both part of a group of companies that in 2015 received government permission to launch social credit pilot programs.

For now Alibaba and Tencent’s credit score systems remain in their early stages. Yet the Chinese Communist Party’s strong hand in driving the initiative, coupled with its track record for online surveillance and censorship, has led some to fear that an Orwellian system (link in Chinese) is brewing—access to any number of goods, services, and privileges might be dependent on a single score.

But much, if not most, of its data for people will come from social media. Tencent’s chat apps, WeChat and QQ, have 938 million and 861 million users, respectively (pdf). They know who our friends are, what we read, what games we play, what we chat about privately, and what we post on public social feeds (Alibaba has some of this data too, but not to the same extent). One of the descriptions (link in Chinese) of how Tencent tracks “social connections” states it observes “notices from people in their network, primarily from social account information, to determine “whether social behavior is healthy.”