Ant Group ‘Buy Now, Pay Later’ consumer loan business, Huabei, is now part of the People’s Bank of China (PBOC) credit system, following the unbundling of the Alipay super app and the Chinese authorities ‘takeover of clients’ finances. data accumulated by large fintech companies.
The information Huabei forwards to PBOC includes all account registration dates, credit limits and reimbursement records, according to a declaration posted by Huabei on Weibo on Wednesday. Users say they must consent to the data sharing process to access Huabei’s features.
Some users are concerned about the impact of this credit data on other lending activities that were previously handled separately, such as loan applications from banks. Prior to the current deal, Alipay processed user data from its payment apps and Alibaba’s e-commerce platforms to issue credit scores and small loans. Late payments would only affect the processing of loan credits within Alibaba’s app constellation.
Huabei started sharing credit data with PBOC in 2020, according to a report by Shanghai Securities News. However, this only covered a portion of its user base rather than all users. Jiebei, the Ant Group’s small loan provider platform, has been linked to the central bank’s credit system since 2017.
“Under normal circumstances and with one-off repayments, the use of other financial services, including loan applications, will not be affected,” Huabei said in its Weibo statement. It will submit credit data to the central bank on a monthly basis, but will not disclose consumption details of individual users, the platform said.
“Our data shows that over 99% of Huabei users have good credit records. We recommend that users continue to use Huabei within personal limits, ”Huabei said.
Chinese regulators have ordered Ant Group to separate its consumer lending businesses, including Huabei and Jiebei, from its core fintech offering. Huabei and Jiebei are not part of a partly state-owned credit rating joint venture. These services will also have their own applications.
Alipay has more than 1.2 billion users, while Huabei and Jiebei share 500 million users, according to the company’s latest data.
Group of ants prospectus which was submitted to the Shanghai Stock Exchange before its scuttled IPO says its credit business, which encompasses Huabei and Jiebei, has been the company’s most profitable vertical in recent years. In the first half of 2020, this line of business garnered 28.58 billion RMB ($ 4.4 billion), accounting for 39% of the company’s revenue during this period.
At the end of June 2020, the total amount borrowed by users through Ant’s loan services was RMB 1.73 trillion ($ 270 billion). Only 2% of this was funded with Ant’s own cash, 10% was funded by asset-backed securities and the remaining 88% was funded by banks and trust companies.
This funding structure has alarmed Chinese regulators, who intervened to stop Ant Group’s IPO and put more stringent oversight in place.
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