Alipay, Wechat Symbolize Chinese Fintechs

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When the topic is fintechs in China, the discussion invariably centers around two mega platforms - Alipay and WeChat. These two are synonymous with China’s fintech growth. An estimate puts the value of mobile transactions on these 2 platforms at $12.8 trillion during January-October 2018 period, which is way above the $49.3 billion worth of transactions in the US during this period. Alipay and WeChat, owned by Chinese internet behemoths Alibaba and Tencent respectively, together account for 93% of China’s mobile payments market. Alipay claims it has the ability to process 256,000 transactions a second. The fraud loss rate on Alipay platform is less than 0.01 BPS as opposed to 3 BPS at one of the world’s leading online payment company in the US. And on Alipay platform, it takes just 3 minutes for a borrower to fill out a loan application and the loan is approved in one second and with zero manual intervention. The company claims it is using big data and AI algorithms to achieve what is called the ‘310’ model - 3 minutes to apply for credit, 1 second to approve, and 0 people involved in the decision.

Alipay and WeChat have changed the way Chinese people live their financial lives. They are one-stop shops that enable half a billion Chinese to access an array of services - from payments, loans, investments and credit scores to taxi rides, travel bookings and social media. In contrast, Alibaba and Tencent know the health (or lack thereof) of small businesses across China and they have loan products for companies that banks might consider risky. Similarly, people with no traditional credit score can get cheap loans because Alibaba and Tencent have their payment and purchase history.

GROWING BEYOND CHINA