Alibaba is said to be launch its credit payment service very soon, allowing users to use up to 5000 yuan(USD 810) credit to pay for purchasing.
At the mean time, the newly launched Wechat 5.0 draws a lot of attention for its payment service. Internet companies like Alibaba, Tencent, 360buy and Jingdong Mall are all entering into micro-loan business to challenge traditional banks.
Alibaba
Alifinance doesn’t reveal too much details, so we have to wait for the credit payment service’s launch. The credit card interest-free period is 38 days. The credit limit would based on users’ record on Taobao and Tmall. Alifiannce said they would cooperate with banks to run the service.
Earlier in June, Alibaba began offering currency fund products, called “Yu’E Bao” which means leftover treasure in Chinese. Alipay users can choose to put their money in Yu’E Bao to earn returns much higher than banks, with around 4.4% annual return. It has attracted a lot of users because of no minimum requirement and withdraw limit. Now, Yu’E Bao reached 20 billion yuan (USD 3.24 billion). Its users increased to 2.5 million merely in half a month.
Tencent
Wechat 5.0 includes payment service, which is supported by Tenpay. Now users can pay on public platform and pay be scanning QR code. The first batch of enterprises on Wechat includes many sectors, such as air ticket booking, online shopping, movie tickets group buy, etc.
ChinaAMC launched Wechat platform financial products in May 2013. Besides, it is said that Wechat also wants to cooperate with banks to launch financial products. Tenpay revealed to media that this project was ongoing.
Banks
Traditional banks made different reactions towards internet companies’ challenge.
China Industrial Bank stopped its credit card service on August 6. However, the failure of credit card doesn’t mean banks cannot do online business well. Traditional banks have realized the compact of internet, and have been making changes to traditional business model. At present, China Merchants Bank and Ping An Bank have launched their Wechat platform financial services.
Although internet companies cannot compete with traditional banks now, but they stimulate banks to change. Although online finance service wouldn’t be a threat to big loans, in some areas, such as third party payment and Wechat payment would influence online banks and Unionpay.
Some say Alipay and Wechat are not a huge threat to banks yet, because they have to cooperate with banks to provide online finance service. They are not competitors.