Mobike is extending deposit-free, credit-free bike rentals to a hundred cities. After launching the deposit-free system in Hefei, Hangzhou, Dongguan and other cities in May, it will now spread to a hundred areas–including second and third-tier cities–covering more than half its China cities. The first tier cities of Beijing, Shanghai, Guangzhou, and Shenzhen will not be part of the new scheme, labeled a trial by Mobike.

Competition is intensifying after new entrants have shaken up what had become a two-horse race between Mobike and ofo. Removing deposits could prove effective in poaching existing customers of a rival who don’t want to fork out another hefty deposit.

Read our report: As bike rentals cool, ofo chooses to stand alone

Mobike no deposit no ride
When a user in a first-tier city tries to retrieve the deposit, apparently identified by geolocation.

The deposit has been one of the company’s few controls on user behavior. Despite the February 2018 rollout worldwide of a new, stricter system to penalize poor behavior by users, and court cases against the company from a property management company burdened with the costs of dealing with abandoned bikes, not to mention government pressure, a release today from Mobike stated that for the China market:

“The deposit had a certain effect as a guarantee, but with the deepening of a common understanding of all parties involved, increased governmental supervision, individuals’ self discipline and positive intervention by enterprises, the new order of the sharing economy has been preliminarily established.”

The release also states that by applying to have one’s deposit refunded, a user will then be able to still ride Mobike bikes, but the TechNode team has found that the deposit-free scheme is only for new users currently in first-tier cities.

Current deposit-paying users will not be able to apply for a refund and then sign up again for deposit-free. Mobike’s global communications manager Luke Schoen told TechNode that the app uses its geolocation function to determine where the user is for this.

Ofo has previously launched deposit-free but credit-based rental in 25 cities before canceling the scheme in all but five, with only Shanghai, Guangzhou, Shenzhen, Xiamen and Hangzhou keeping the credit-only system.

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Frank Hersey

Frank Hersey is a Beijing-based tech reporter who's been coming to China since 2001. He tries to go beyond the headlines to explain the context and impact of developments in China's tech sector. Get in...

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