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Tencent Begins Testing Credit-Rating Service

By April Ma
The Tencent building in Chengdu is seen on June 23. The Chinese social networking giant has begun testing a credit-rating system, Tencent Credit. Photo: Visual China
The Tencent building in Chengdu is seen on June 23. The Chinese social networking giant has begun testing a credit-rating system, Tencent Credit. Photo: Visual China

The Tencent penguin, a potentially major player in China’s private credit rating scene, is jumping into the business after nearly two years of sitting on its flippers.

The Shenzhen-based social networking and entertainment giant began testing its credit-rating system, Tencent Credit, among a selected group of users of its instant-messaging service QQ this week.

Although it came late to the business of individual creditworthiness-evaluation, Tencent Credit aims to challenge the better established and mostly unrivaled Sesame Credit, the personal credit-rating service of Ant Financial Services Group, the one-time subsidiary of Alibaba Group Holding Ltd., analysts said.

“Tencent is known for playing it safe, especially in nascent businesses,” said Dong Yizhi, an e-commerce lawyer specializing in risk management. “It often practices the market-follower strategy, allowing its competitors to bear the risk and costs of innovation.”

By “competitors,” Dong was referring to Sesame Credit, which Ant Financial launched more than two years ago.

But Dong believes that there are ample opportunities for Tencent Holdings Ltd. to overtake its rival, because the company can tap the abundance of transactions and activities generated by the more than 900 million users of its WeChat social networking and messaging app.

Because Tencent Credit is still in its trial stage, average users are not yet able to learn their credit score, which is determined by the company’s data and algorithms.

However, the information that the company has so far revealed about Tencent Credit suggests that the core criteria more or less mirrors the system developed by Sesame Credit, which factors in payment and consumption behavior, personal particulars and asset ownership, as well as a user’s social circle.

Tencent Credit will score users on a scale of 300 to 800, based on criteria including the purchase of Tencent wealth-management products and how often a user donates to WeChat’s charity initiatives.

In comparison, Sesame Credit scores users on a range from 350 to 900, with the score based on 100 payment-related data-sets harvested through Ant Financial. The system has currently rated about 100 million users, the company said.

At the end of the day, it’s about which type of information you think more accurately reflects creditworthiness, Dong said. “Are you more creditworthy because you’re surrounded by academics and lawyers, or because you spend more online and pay your bills on time?” he asked.

Tencent was one of eight private firms handpicked for a program run by China’s central bank to tentatively open the country’s private-sector personal credit-reporting system in 2015. Ant Financial and a subsidiary of Ping An Insurance were also given a chance to obtain a third-party credit-rating license.

But apparently Tencent has been prudent, refraining from high-profile moves since the incorporation of its credit rating arm in March 2015.

Contact reporter April Ma (fangjingma@caixin.com)

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