Alibaba launch credit cards

Alipay, the online payment subsidiary of e-commerce giant Alibaba, and Internet titan Tencent are both set to expand further into the financial sector with the launch of new online credit cards on Tuesday.

In a statement sent to the Global Times Tuesday, Alipay said it is joining with China CITIC Bank to issue online credit cards for all types of online shopping starting from next week.

The first batch of issuance volume is planned to be 1 million, said the statement, according to which Alipay users can have a minimum credit of 200 yuan ($32.60), while the maximum limit would be subject to their online credit records.

On the same day, Tencent announced its official launch of the first batch of 1 million online credit cards in partnership with China CITIC Bank and Zhong An Online Property Insurance, according to a company statement sent to the Global Times on Tuesday.

Users of WeChat, Tencent's popular mobile messaging application, can apply for the cards with a minimum credit of 50 yuan and a limit of 5,000 yuan, said the statement.

In addition to paying for goods bought online, the credit cards can be used for physical buying through the scanning of WeChat QR codes at retailers who have signed cooperative agreements with WeChat and China CITIC Bank.

Both Alipay and Tencent said that application procedures for their online credit cards are much more convenient and quicker than that for traditional bank cards.

Beijing-based China CITIC Bank said Tuesday in a statement sent to the Global Times that the cards it is issuing in partnership with Tencent have all the basic functions of physical credit cards and allow credit card bill payment via WeChat.

In February, online retailer jd.com unveiled a virtual credit card product with no cooperation with financial institutions, the use of which is simply confined to transactions on its proprietary e-commerce platform.

Tuesday's announcements, the first of its kind in China, came amid an Internet finance wave that has swept across the country.

Several Internet-based money market funds have been released on the market since Alipay's Yu'ebao, the country's first online monetary fund, was launched in June 2013.

In November 2013, Alibaba, Tencent and Ping An Insurance (Group) Co of China also co-established Zhong An, China's first online liability insurer.

"The launch of online credit cards strengthens the belief that Internet firms' entry into the financial sector will be a growing trend [in China,]" Zeng Linghua, chief analyst at Shanghai-based fund consultancy Howbuy, told the Global Times Tuesday. More banks will follow suit, Zeng forecast.

For smaller banks such as China CITIC Bank, partnering with Alipay and WeChat with their huge user bases enables them to reach out to mass consumers boosting their competition edge over big State-owned commercial banks, Zhang Yi, CEO of Shenzhen-based Internet research firm iiMedia Research, told the Global Times Tuesday.

Alipay, the nation's largest third-party Internet payment platform by transaction volume, said in the Tuesday statement that its real-name registered users total more than 300 million so far, while Tencent said in its third-quarter financial disclosure that by the end of September 2013 Wechat's monthly active users were 2.72 million.

Tencent's fourth-quarter report is scheduled to be published on March 19.

Online credit cards may mostly be attractive to young people who are technology savvy and don't have a credit card, Zhang said, noting security would be the biggest concern.

In an effort to allay users' concerns over using the virtual credit cards, Tencent said Tuesday that transactions will be guaranteed by the online insurer Zhong An.

But Xiao Man, a 22-year-old university student from Central China's Hunan Province, was still uneasy.

"I won't apply for the cards unless it is proven that not many people are worried about potential security risks," she told the Global Times Tuesday.