Points and prizes

A picture illustration shows a WeChat app icon in Beijing, December 5, 2013. An unprecedented Nov. 14 leak of China's Communist Party reform plans fuelled China's biggest stock market rally in two months as it spread on microblogs and passed from smartphone to smartphone on WeChat, a three-year-old social messaging app developed by Tencent Holdings Ltd. WeChat, or Weixin in Chinese, meaning "micromessage", leapt from 121 million global monthly active users at the end of September 2012 to 272 million in just a year. It has quickly become the news source of choice for savvy mobile users in China, where a small army of censors scrub the country's Internet of politically sensitive news and "harmful" speech. Picture taken December 5, 2013. REUTERS/Petar Kujundzic (CHINA - Tags: BUSINESS POLITICS TELECOMS) - RTX16EHJ

Tycoons like to come out on top. That’s what makes them tycoons in the first place. But Tencent’s Pony Ma just had to settle for less-than-top-spot after failing to secure the highest rating on his company’s new credit scoring system.

Tencent launched WeChat Pay Score at the beginning of June and its founder posted his personal score of 835 soon afterwards. Scores range from 300 to 850, so Ma’s was a high one. But the local media was tickled that he wasn’t in the highest category, especially when one of his colleagues at Tencent posted a few minutes later that he had scored 848 points.

Much of this sounds like a marketing stunt, WiC suspects, as WeChat Pay Score is following in the footsteps of Alibaba’s Sesame Credit scheme, which has been in operation since 2015. As Sina Finance points out, Tencent has lagged Alibaba in financial services in general, although the two dominate the third-party payments business with market shares of 39% and 54% respectively, according to iResearch.

The payments war is now spilling over into a conflict over credit ratings, Sina says. Tencent is late to the credit rating game, but that’s partly down to the government. The Shenzhen-based giant backed out of beta testing a similar service in 2018 after the People’s Bank of China (PBoC) bristled at the fact that it was getting ahead of a system that it was due to roll out a few months later.

Now the tech giant is back, offering WeChat customers access to 1,038 credit-related services depending on their score. If their rating is high enough, they can rent all sorts of goods and services without having to pay deposits first. Personal scores are updated once a month based on payment behaviour, credit history and information on areas such as educational background, home address and family members. The system is only open to Chinese nationals and has opt-out features, similar to Sesame Credit.

Both tech giants are deploying credit scoring as a way of bestowing different privileges on their platforms. That makes them different to the credit reporting licenced by the PBoC, which focus on creditworthiness for borrowing money from banks. The central bank has also been trying to build a more effective system at a national level, with the setting up two years ago of a platform called Baihang. Lauded as a way of opening up lending to hundreds of millions of people without formal credit histories, Baihang goes beyond the traditional banks by asking consumer finance firms and online lenders to provide their own data on the creditworthiness of their customers. But progress has been slow as many firms have been reluctant to share, including Tencent and Alibaba, which have dragged their feet on pooling information.

In many ways WeChat Pay Score is a souped-up version of the kind of loyalty programmes that many companies offer around the world. However, WeChat’s unprecedented reach into the everyday lives of its users has also led to questions about how the algorithms might determine the final ratings. For example, could someone be penalised for spending heavily on alcohol or cigarettes? Is WeChat tracking whether Chinese nationals are heading for the casino when they leave the country on holiday?

In Western nations there are calls to limit the way that big tech firms are allowed to harvest personal data. In their newly published book Angrynomics, Eric Lonergan and Mark Blyth argue that governments should force companies like Amazon and Google to pay their customers for using their personal information.

But back in China social media users seem less focused on their rights to data privacy, or the risks in the “social accounting” that is implicit in the credit ratings. Instead the concerns are more immediate, like whether they have a good credit score or not, and how they can improve it.

Asked this question by customers earlier this month, Tencent’s answer was immediate: use WeChat Pay, our digital payment app, more often.

© ChinTell Ltd. All rights reserved.

Sponsored by HSBC.

The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.