23 April 2019
'Circles' can help lure more users to Ant Financial’s rating platform Sesame Credit and pave way for the firm to offer a slew of services such as personal loans. Photo:
'Circles' can help lure more users to Ant Financial’s rating platform Sesame Credit and pave way for the firm to offer a slew of services such as personal loans. Photo:

Why Alipay’s new ‘Circles’ can kill two birds with one stone

Ant Financial Services Group, the financial affiliate of e-commerce giant Alibaba Group, has rolled out a new social networking feature called “Circles” on its flagship Alipay app.

Following the launch late last week, the service quickly became a topic of heated discussion in China.

Only women are allowed to post photos on Circles, and only those with high credit scores (above 750, according to the rating system of Ant Financial’s Sesame Credit) can view the postings and make comments, and even offer cash gifts through online payment.

That has led the platform into something resembling a dating site, critics say, pointing to racy images and messages being circulated by users. 

One Circles group “Campus Diary”, for instance, now has thousands of photos of young women posing seductively, accompanied with messages openly soliciting wealthy boyfriends.

As the new function came under fire for inadvertently promoting hook-ups, Ant Financial issued a statement saying that the service is still in the testing stage, and that it will crack down on those who are misusing the platform.

The controversy notwithstanding, Alipay’s new feature can help the Alibaba Group push its financial services business.

Alibaba and Tencent have built unparalleled dominance in China’s e-commerce and social networking markets respectively. Both the firms have been trying to encroach on each other’s territory.

Given this, Circles is probably conceived to kill two birds with one stone.

First, Circles, though a bit outrageous, can compete as social networking platform for niche groups.

Second, be it good or bad, the publicity Circles generated is likely to lure more people to Ant Financial’s credit-rating platform.

Sesame Credit is in fact a pillar business of Ant Financial. It evaluates credit rating of users using big data technology. The company can then offer the users credit cards and other services like consumer finance, hotel booking and car rental.

For example, those scoring above 600 can get a 200,000 yuan loan without any approval process. And they can make reservation in hotels, cars without deposit.

Credit evaluation used to be a core function of financial institutions, but the process has been fairly inefficient, as the firms rely completely on clients to submit necessary documents, like income statement, asset proof or even collateral.

Now, Sesame Credit has replaced that tedious process with big data mining skills, which amass information through various channels, such as payment records of their e-shopping activities, personal details including address, driving license number, mobile phone number and social security account number, and then deduce a conclusion on the user creditworthiness.

The difficult part is how to get more users to register for Sesame Credit service. Looks like Circles is the right gimmick to get the job done.

This article appeared in the Hong Kong Economic Journal on Nov. 29

Translation by Julie Zhu

[Chinese version 中文版]

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Hong Kong Economic Journal columnist

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