Chinese gaming and social giant Tencent has rolled out “Fen Fu,” an embedded credit feature which allows its 1.1 billion WeChat users to “buy now and pay later.”

Why it matters: Fenfu is Tencent’s foray into microloans, a service which Alipay offers users with its Huabei feature, and with its Baitiao product.

  • This rollout shows Tencent’s strategy in building a digital ecosystem in which users have easy access to financial services within the WeChat app itself. 
  • In recent months, Meituan and Alipay have set out their long-term strategy of providing comprehensive digital lifestyle services, fully integrated into their existing apps.
  • Tencent’s gains in fintech show that the competition to serve all user needs will only heat up. 

Details: Announced last year, large numbers of users had access to the Fen Fu function as of last week (in Chinese)

  • Users can rely on Fen Fu to pay for eating out, shopping, and watching movies but cannot use it to send payments to other WeChat users. 
  • When paying, users do not have to withdraw credit in advance. They can directly select Fen Fu as an option when paying. 
  • Users will pay a daily interest on money borrowed and can repay the full amount at any time. 
  • Fen Fu has no fixed interest rates nor payment due dates—differing from other installment payment products.
  • Instead, interest rates drop whenever money is paid back. 

Context: In Q4, Tencent reported fintech and business service revenue of RMB 29.9 bil­lion (around $4.2 billion), growth of 39% year on year, accounting for 28% of to­tal rev­enues for the quar­ter.

  • WeChat Pay rival Alipay has been expanding its cross-border partnerships and broadening its financial services ecosystem in collaboration with other user-rich platforms.
  • Microlending took off in 2016, and is particularly popular among China’s younger consumers: more than half (in Chinese) borrow money to finance their daily consumption.

Lavender Au

Lavender covers regulation and its effects on people. She previously worked in a policy advisory analyzing China’s internal governance for foreign governments and multinationals. A History graduate from...