Ant Financial’s push for deposit-free rental services in China

Before using “sharing economy” services such as bike-sharing or power bank rentals in China, customers are often required to put down a deposit, which can range from 100 yuan to several thousand.

The system can be problematic, as thousands of furious users recently discovered when they were unable to withdraw their deposits after car-sharing firm Ezzy and bike-sharing start-up BlueGoGo went out of business.

But Ant Financial thinks it may have solved the problem using its social credit-scoring system, Sesame Credit.

The financial arm of Alibaba said it will invest 1 billion yuan (US$151.8 million) in helping companies go deposit-free, according to Sesame Credit’s general manager, Hu Tao. Alibaba owns the South China Morning Post.

Sesame Credit is Ant Financial’s proprietary credit-scoring system and an attempt to give its Alipay e-wallet users a credit score in a country where less than a third of the population have an official credit history.

Users are given a Sesame Credit score based on their spending habits, the friends they have on Alipay, and whether they fulfil their financial obligations on time. For example, users who provide information such as their education history and driving licence, and pay their bills on time with Alipay, may be awarded a better score than users who provide no personal data and are late with bill payments.

Technology rival Tencent has started testing its own credit-scoring service, which calculates scores based on data collected largely through its WeChat and WeChat Pay platforms.