Tencent is incubating a new consumer finance product tentatively called “Fen Fu” that allows approved WeChat users to pay in installments for purchases, Chinese media reported Thursday.
The online credit payment product is similar to Huabei from Ant Financial and Baitiao from JD Finance.
Why is this important: The internet giant’s new credit payment product could spark a new battle between China’s biggest fintech service providers, namely Alibaba, Tencent and JD.com.
- Consumer loan services became popular in 2016, especially among young Chinese tech-savvy consumers. However, such services are fueling China’s rise household debt, especially for generations born after 1990, which is becoming a growing national concern.
- According to finance services company Rong 360, 50.2% of consumers born after the 1990s borrow for their daily use. More than half of young consumers use online loan services, with the exception of credit cards, Alipay’s Huabei virtual credit card, and JD Baitiao’s online credit product.
Details: According to Chinese information, Fen Fu is a new credit payment service running under WeChat Pay and is expected to launch in the fourth quarter of this year.
- A spokesperson for WeChat Pay told TechNode that the team has not received any information about Fen Fu and declined to say whether Tencent plans to roll out similar consumer loan products in the near future.
- Similar to the Wei Li Dai consumer loan product of Tencent’s digital banking arm, WeBank, Fen Fu would provide lending service in cooperation with banks and financial institutions under the syndicated loan or loan facilitation model. .
- Tencent is reportedly still negotiating terms with banks and licensed consumer credit institutions.
The context: Tencent operates WeChat Pay, one of the largest mobile payment services in China, and launched the country’s first digital bank, WeBank.
- The Internet giant’s fintech activity is growing rapidly. In the first quarter, its fintech arm’s revenue exceeded other core business units like mobile games.
- Other Chinese tech giants, including Ant Financial, have extended their fintech service ecosystems to peer-to-peer payments, cross-border payments, and consumer loans.