The terms of each line of credit, such as credit limit and interest rate, is based on a user’s prior shopping history “using sophisticated data analysis.” Grantees can choose to pay the money back in full within 30 days or make monthly payments every three to 12 months. Jingdong says there is a market desire for an installment payment option, especially among young shoppers.
This is the first service of this type offered by internet firms in China. Previously consumers would have to go to the traditional banking system to get access to lines of credit by applying for personal credit cards. JD.com will enable its users to apply for credit lines within a minute and will cut service costs into half compared to traditional banks.
Jingdong states it began testing the credit line service in January.
Unlike most bigger e-commerce sites in China, Jingdong is not a marketplace – it maintains its own inventory of goods. At last count, the company had 35.8 million active customers. The company recently filed for an IPO in the US to be completed sometime this year.
Jingdong and Alibaba both offer financing services for their suppliers and retailers, respectively, but Jingdong has now beaten Alibaba to the punch on consumer credit.