Chinese tech giant Tencent Holdings Ltd. has launched a credit scoring system based on what users buy over its messaging app WeChat, a move that will enable it to offer consumer-related credit services on its platform even after it failed to get an official personal credit reporting license from the central bank.
The scores are based on users’ credit records while using the WeChat payment services and their identity features. Those who have solid credit records can enjoy privileges, including “use first and pay later” and deposit-free services on over 1,000 items on the platform, according to a statement from the WeChat platform.
The scoring system is similar to the rating system of Zhima Credit, also known in English as Sesame Credit, a service of Alibaba Group Holding Ltd.-affiliated Ant Financial Services Group, launched in 2015.
The credit scoring systems of both Tencent and Alibaba are mainly used for deciding privileges in spending activity on their own extensive platforms, which is different from the formal personal credit reporting system, which requires a license from the People’s Bank of China (PBOC), and is used to determine consumers’ creditworthiness for activities like borrowing money from banks.
China now has two formal credit reporting systems. One is the Credit Reference Center of the PBOC which acts as a commercial and consumer credit reporting system focusing on traditional financial institutions such as banks. The other is Baihang Credit Scoring, a central bank-backed agency, which pools information from nontraditional lending channels and supplement the