Meanwhile, Fenfu's success will depend in part on its ability to attract users who fall into a price-sensitive (particularly to fees accruing daily) segment. WeiLiDai is available to both consumers and businesses. WeiLiDai is a cash loan product providing loans ranging from RMB 500 to RMB 40,000. Another lending product from WeChat is WeiLiDai (微粒贷), which was launched in 2015 by Tencent-backed WeBank, the first digital bank in China. Tencent does hold a minority stake in JD.com, but JD has its own consumer finance product, Baitiao, which may prove to be a competitor of Fenfu. Unlike Alibaba-backed Huabei, which is largely used within the e-commerce platform Taobao, Fenfu is not directly integrated with a comparable online shopping marketplace. The personal credit limit depends on the WeChat credit score called Zhifufen (支付分) assigned to each user of WeChat Pay. Authorized users can directly choose "Fenfu payment" when paying. But with Huabei Installment, consumers still need to pay for all commissions unless there are specific promotions that waive the commission fees.Īt present, Fenfu is in the pilot stage and only some WeChat users have access to it. Further, if consumers can repay the entire amount in advance with Fenfu, they only need to pay for interest generated during the use period. Fenfu’s daily interest rate is 0.01% lower than Huabei. However, in the case of a consumption installment payment, Fenfu will be the more cost-efficient choice. In contrast, Fenfu would charge a few fen (0.01 yuan) of interest based on its daily rate. For example, if someone wants to purchase a bubble tea for 20 yuan and pay later, Huabei would be a better choice due to its 41-day interest-free period. Interest accrued during the interest-free period will not be charged.įenfu and Huabei have competitive advantages under different circumstances. If consumers fail to repay within the contract period, they need to pay interest at a daily rate of 0.05% of the overdue amount after the interest-free period ends. When it does charge a commission, the rate is 2.3% for 3 installments, 4.5% for 6 installments and 7.5% for 12 installments. Sometimes this installment service charges no commission. Huabei’s users can choose Huabei Installment as their payment tool, or transfer their Huabei bill to installment. Huabei, along with many credit cards, normally have an interest-free period up to 50 days. If users cannot repay the minimum amount on the selected date, their account will get frozen after 30 days. Users can repay at any time, or repay by installments with the minimum repayment per period of 10% plus interest. Fenfu’s interest is calculated immediately based on the daily unpaid amount and the rate is 0.04% per day, which comes to an annualized interest rate of around 14.6%. The most significant difference between Fenfu and regular credit consumer finance products like Alipay’s Huabei (花呗) is the interest settlement method.
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