Tencent Looks to Take on Alibaba With New Credit Scores

The mobile payments market in China essentially looks like one runaway leader and a herd of also-rans frantically trying to snatch the remaining crumbs of market. Alipay is the current leader, but its biggest rival, Tencent, isn’t taking this development likely. It’s brought out a new credit scoring system that might get some more users in its own stable, and better compete with Alibaba.

Tencent’s new credit scoring system is actually following up on the one released by Alibaba payments affiliate Ant Financial—known as Sesame Credit—two years ago. Tencent’s system will take both social and financial histories into account and create its own credit score, a measure that’s increasingly popular in China for younger subscribers.

These subscribers commonly haven’t had the time or the cash to build a traditional credit rating like their older counterparts, and a cultural taboo against many kinds of debt, including credit cards, really hasn’t helped. Yet with a decent credit score, there’s access to services like hotel rooms and rental bikes without the need to carry or otherwise commit cash for a deposit.

With a market measuring around $5.5 trillion—a market that’s over 50 times that of the United States—it’s easy to see why Tencent would want a bigger slice of the pie than it’s currently getting. A massive new boost in online shopping options, and an overall lack of alternatives in the field, is driving more users to mobile payments.

It’s hard to see why those already using Alipay would depart for Tencent because Tencent started offering a feature that Alipay already has been offering for some time, according to reports. Tencent can hardly expect to pull customers away from Alipay by offering up the same services that Alipay is; it’s got to give customers an incentive to pull out, through special deals, exclusive shops, or similar services that the competition can’t readily match.

Still, it’s at least shoring up its own operation, and that will likely be a welcome development for the current users who have less reason to go to Alipay thanks to a lack of features. Tencent’s move might protect its current base, but it’s not likely to give it a lot of room for expansion.