Bike rental company Mobike has announced complimentary rides and deposit-free use of its bicycle network in Anhui province’s capital of Hefei, local media is reporting.

Unlike other bike rental platforms, users would not need to use Sesame Credit to sign up or use the bikes without paying a deposit. Existing users in the city who have already paid a deposit can be refunded within the app.

Hefei is the first city in China to benefit from the new system but its not clear if or when it will be rolled out to the rest of the country.

Deposits create substantial cash flows for bike rental companies. Mobike had 4.21 million weekly active users in January, resulting in an accumulation of RMB 1.26 billion. While they are supposed to be held as collateral, deposits have been a contentious issue in the bike sharing industry. Numerous companies, including Bluegogo, highlighted the danger of paying deposits when these platforms fail. Before being partly taken over by Didi, Bluegogo Vice-CEO Hu Yufei admitted that the deposits had formed part of the company’s operating budget.

Coolqi also ignited fear shortly going under. In an announcement, it said that it would no longer refund deposits through WeChat, and required users to visit an office in Chengdu, Sichuan to get their money back. The news caused the government to step in. In a meeting between transport representatives from 17 provinces in November  2017, officials got together to discuss how to handle the deposit and refund system better.

Mobike made global news in April following its acquisition by Meituan. The company then announced a reshuffle in upper-management. Mobike CEO and co-founder Davis Wang stepped down from his position, while fellow co-founder Hu Weiwei took over the top spot.

Christopher Udemans is TechNode's former Shanghai-based data and graphics reporter. He covered Chinese artificial intelligence, mobility, cleantech, and cybersecurity.

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