Alipay’s Ant Financial Services Group has established China’s first credit agency, called Sesame Credit, to use a system based on online and offline data to generate individual credit scores for consumers and small business owners.
On January 5, 2015, China’s central bank issued a notification that allows eight organizations to provide personal credit services; Ant Financial Services Group was one of them.
Sesame Credit leverages big data and customer behavior analysis to assess creditworthiness, which is expected to make it easier for companies to extend credit to millions of Chinese consumers with reliable means of determining the ability of customers to pay their bills, get car loans, mobile-phone service contracts and etc.
Credit Sesame uses the internationally accepted credit points to visualize the performance of credit standards with minimum of 350 points and maximum of 950 points; higher scores represent better credit rating. This is similar to America’s FICO score points (between 300-850 points).
There were only less than a quarter of China’s population, 320 million citizens had credit records in the People’s Bank of China credit reference center as of early 2014 according to Zhang Jianhua, head of the PBOC’s Hangzhou branch comparing to 85% In the U.S..
Sesame Credit combines traditional sources of information for assessing creditworthiness such as public records with vast amounts of online data from more than 300 million real-name registered users and 37 million small businesses from Alibaba Group, an affiliate of Ant Financial. In addition, public agencies, financial institutions, and merchants are other sources of data.
Sesame Credit is currently testing the service with some hotels in China, which allows travelers with top credit scores to book a room without making advanced payment. The company is also testing with a Chinese online dating site that allows checking their potential dates’ credit scores.
User privacy and personal data would be protected according to Credit Sesame.