Alibaba users’ spending data is going to be used to determine credit ratings, according to a New York Times DealBook article by Neil Gough. The evaluation will be done by the Sesame Credit Management Group, a new credit-rating agency introduced by Any Financial Services, which in turn is controlled by Alibaba founder Jack Ma.
The idea is to help enable to the vast numbers of Chinese lacking official credit histories to start borrowing. Speaking to Gough, a Sesame Credit data scientist noted that even though many Chinese people have never applied for loans or credit cards in the past, “they might be active Internet users who shop online a lot, e-pay their utility bills on time, have a stable residential status and have been using their mobile phone numbers for a long time,” adding that this sort of information could be used to assess their creditworthiness.
About a quarter of China’s entire population are registered users with Ant Financial, and Sesame Credit will have access to their data. It’s also going to use data from Alibaba’s eCommerce endeavor, and from Alipay, Alibaba’s new mCommerce platform.
Recent relaxations of policies have allowed for the introduction of foreign credit card companies into the Chinese market, and have also opened the doors for mCommerce platforms like Apple Pay, which will launch in China this year. If all goes well, Sesame Credit will allow for a further expansion of economic freedom in the country that will complement the various other endeavors underway.