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Hellobike offers deposit-free service nationwide based on Alipay credit system

Hellobike bicycles on a street in Luoyang city, in China's Henan province. Photo: Imaginechina

China's bike-sharing company Hellobike has announced plans to launch a deposit-free service in more than 180 cities, allowing users who hold a Sesame Credit score of 650 or higher to rent a shared bike without deposit.

In order to enjoy the deposit-free service, users must use Alipay to verify their credit scores, and those who fail to reach the credit limit requirement also have an opportunity to obtain a preferential card which enables them to ride a shared bike without paying deposit.

Sesame Credit is a social credit evaluation system created by Chinese e-commerce giant Alibaba Group's financial unit Ant Financial. Alipay, the country's popular mobile payment service, is also operated by Ant Financial.

Three months ago, Hellobike launched a trial operation of the deposit-free service in 20 cities, which made users exempt from deposits valued at as much as 1.8 billion yuan, said the company, which was acquired by Alibaba-backed bike-rental company Youon last October.

The pilot project came as domestic media reports said that a growing number of shared bike users found it harder to get their deposits back, fueling public concerns that many bike-sharing firms were embezzling deposits to fund their money-burning expansion. Last year, some small bike-sharing startups were reported to go bankrupt due to capital chain rupture.

While the launch of the deposit-free service would undoubtedly increase the operating costs, industry insiders said that the new feature would help Hellobike reach out to more potential users especially at a time when Mobike and Ofo grasp the lion's share of the country's bike-sharing market. Last week, Ofo raised $866 million from a new round of financing led by Alibaba, fueling the competition as Mobike and Ofo go head to head.

"The deposit-free model may tighten the screws on the bike-sharing firms in terms of operation, but it would be periodical. What's more, the deposit-free model would prompt them to adopt the artificial intelligence and Internet of Things technologies in improving the operating efficiency," said Wang Huie, a senior analyst at Beijing-based Internet consultancy Analysys.

Hellobike estimated that as of the end of 2018, its deposit-free option would benefit 160 million users and help save deposits of up to 30 billion yuan.

According to a report released by the China Internet Network Information Center, as of the end of 2017, the amount of deposits paid by shared bike users were estimated to reach 20-60 billion yuan, with about 6-7 million users being unable to reclaim deposits of 1.5 billion yuan due to the collapse of several bike-sharing service providers.

Wider use of Alibaba's credit scoring system

Analyst Wang said that the deposit-free service would also enhance the popularity of Alibaba's Sesame Credit system among Chinese consumers. "The credit scoring system for bike-sharing would help promote the efficient development of China's sharing economy and accelerate the construction of the country's social credit system," said Wang.

Last year, Ofo introduced Alibaba's Sesame Credit system to power its deposit-free service, which the bike-sharing company recently said helped make about 30 million users exempt from paying more than 4 billion yuan in deposits in 2017.

Hu Tao, general manager of Sesame Credit, predicted that the number of shared bikes that users can rent without paying deposit would surpass 10 million after Hellobike offered the Sesame Credit-driven deposit-free service nationwide.

Besides Hellobike and Ofo, other bike-sharing startups including Youon, Bluegogo and U-Bicycle also made available their deposit-free services in partnership with the Sesame Credit system, which has been applied in various scenarios including shopping, trading and hotel room booking.

Facing the competition, Tencent launched its own social credit scoring system similar to the Sesame Credit system last year. In November last year, Mobike, the archrival of Alibaba-backed Ofo, announced that users with a Tencent Credit score of 630 or higher were entitled to enjoy its deposit-free option. Tencent is Mobike's major financial supporter.
 


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