Tencent is incubating a new consumer financing product tentatively called “Fen Fu” that allows approved WeChat users to pay in installments for purchases, Chinese media reported on Thursday.

The online credit payment product is similar to Ant Financial’s Huabei and JD Finance’s Baitiao.

Why it matters: The internet giant’s new credit payment product could ignite a new battle between China’s largest fintech service providers, namely Alibaba, Tencent, and JD.com.

  • Consumer loan services became popular in 2016, especially among China’s younger tech-savvy consumers. However, such services are fueling China’s climbing household debt, especially for generations born post-1990, which is becoming a growing national concern.
  • According to financing services firm Rong 360, 50.2% of consumers born post-1990s borrow for their daily consumption. Over half of young consumers resort to online lending services, excluding credit cards, Alipay’s virtual credit card Huabei, and JD’s online credit product Baitiao.

Details: According to Chinese news reports, Fen Fu is a new credit payment service operating under WeChat Pay and is expected to launch in the fourth quarter of this year.

  • A WeChat Pay spokesperson told TechNode that the team has not received any information about Fen Fu and declined to comment on whether Tencent has plans to roll out similar consumer loan products in the near future.
  • Similar to consumer lending product Wei Li Dai from Tencent’s digital banking arm, WeBank, Fen Fu would provide loan service in cooperation with banks and financial institutions under the syndicated loan or loan facilitation model.
  • Tencent is reportedly still in the process of negotiating terms with banks and licensed consumer finance institutions.

Context: Tencent operates WeChat Pay, one of the largest mobile payment services in China, and started the country’s first digital bank WeBank.

  • The internet giant’s fintech business is growing rapidly. In Q1, revenue from its fintech arm outpaced other core business units like mobile gaming.
  • Other Chinese tech giants including Ant Financial have been expanding their fintech service ecosystems into peer-to-peer payments, cross-border payments, and consumer lending.

Nicole Jao is a reporter based in Beijing. She’s passionate about emerging trends, news, and stories of human interest within the world of technology. Connect with her on Twitter or via email: nicole.jao.iting@gmail.com.

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