Ant Group to revamp its buy-now-pay-later service Huabei

November 24, 2021 6:45 pm

Alibaba’s fintech arm Ant Group reportly began regrouping Huabei, its BNPL (buy now pay later) service. According to Huabei's Weibo post, first party lending service will be divided from 3rd party lending services. With the new adjustments, lending services provided by third parties will no longer fall under the umbrella of Huabei, but will be classified as “Xin Yong Gou”, which translates to "credit buying". In its separate page inside Alipay, Xinyonggou services will be clearly marked with the name of its providers.

Huabei is Ant Group's credit card alternative. A Huabei user's credit limit depends on their credit score, purchasing history and how much money they have deposited in Alipay.

According to Ant Group's prospectus in 2020, Alipay has more than 1 billion active annual users, nearly half of which uses Huabei. According to a Caixin report, by the end of March 2020, the combined loan size of Huabei and Jiebei, Huabei’s sister brand providing loan services, exceeded trillions of yuan. By the end of June 2020, 1.7 trillion yuan of consumer credit loans could be accredited to the Alipay platform. In 2020, Huabei generated 4 billion yuan income for Ant Group.

In recent years, as consumer credit loans became overly easily accessible by the aid of platforms such as Alipay, regulators became concerned about the financial security of users, especially young users who might be impulsive and racked up debt more than they could afford.

In February, the China Banking and Insurance Regulatory Commision issued the “Notice on Further Regulation of Commercial Banks' Internet Lending Business”, which imposed restrictions on the contribution ratio of joint lending, requiring commercial banks' partners to "contribute no less than 30% of the partner's capital in a single loan". The notice aims to restrict lending platforms from eager expansion and reckless business conduct.

Complying to the notice, on April 12th, Ant Group announced that its Huabei and Jiebei services will all be incorporated into separate subsidiary consumer finance companies to carry out related business.

On September 22, Huabei said that it was "pushing forward to access the central bank's credit system in an orderly manner, meaning Ant Group will share credit data with the Central Bank, including user's credit limit, amount of credit used, payment status and account creation date.

Since the adjustment, Huabei users have been venting on social media such as Weibo, about their Huabei limit suddenly dropping without prior notice. The drop can be drastic - one user had a Huabei limit of 60,000 yuan, which suddenly dropped to 1,000 yuan overnight. Others experienced more frustrating situations, as their Huabei limit had been reduced to zero. Nor the Huabei team or Alipay has responded to the issue. Possible causes may include credit reassessment — as Huabei is sharing user’s credit information with Central Bank, users debt or loan related information could outside of Huabei could affect Alipay credit score and Huabei limit.