Alibaba's new partner in the US is Kabbage, the digital credit interface for small businesses. It's an interesting combination, to say the least: Kabbage is a pioneer of alternative credit data in the US, while Alibaba was one of the Chinese businesses allowed to build a private credit rating system in China. Alibaba is taking a softly softly approach to the US following the rejection of its attempted acquisition of Moneygram. "To increase sales to U.S. small businesses, the company has partnered with Kabbage, the SoftBank-backed unicorn that provides loans to SMBs using big data and machine learning to determine eligibility faster than a traditional bank lender, to provide up to $150,000 of financing at the point of sale on Alibaba.com as part of a new program called Pay Later," reports TechCrunch. Kabbage's proposition uses social media and alternative data including from a partnership with delivery business UBS, along with more traditional metrics, to gauge creditworthiness of small business borrowers, and it also offers its service as a white label for other lenders. "For Alibaba, offering a way to finance purchases is an essential component of courting small and medium businesses, which may not always have a large amount of working capital at hand to reinvest in equipment and other business services. The high $150,000 limit is a signal that this is not about buying small office supplies but making larger purchasing commitments."
The rise of digital credit is largely dependent on "alternative data" enabled by the vast swatches of information on individuals and businesses that is sucked up by the digital advertising industry, ending up in the hands of Google, Amazon, Alibaba and WeChat. In China, the government now requires this private credit data to flow through its servers, so it can better monitor the shadow banking world. Alibaba pioneered the Sesame Credit system and now WeChat is building its own system. "To merchants, WeChat Pay Points provides them with features including user identification for credit risk and payment collection, in order to reduce merchants' bad debt rate," writes ejinsight.com. "Without disclosing the scoring range, users with more than 800 points are reportedly considered high scores. Chinese media reported that a domestic power bank-sharing service has waived the 99 yuan deposit for users with WeChat Pay Points score reaching 550. WeChat Pay Points is now linked to WeChat's "mini-apps", which are mini mobile applications that are built into the WeChat platform and developed by third-party businesses.... President's Xi Jinping's initiative to build a social credit system based on the principle of "once untrustworthy, always restricted."
In India, US and Chinese digital players are competing hard, and government rules initially forced platform players to operate just as platforms and not as sellers in their own right. "Amazon and Flipkart have been given until the end of this month to comply with new restrictions, announced in late December, that sharply restrict the use of their hefty balance sheets to boost sales on their virtual marketplaces," notes the FT. "But while the move is intended to strengthen the government's credentials among India's millions of small retailers, it has sparked alarm for two of the country's biggest outside investors. Walmart's $16bn buyout of Flipkart last year was the biggest foreign direct investment in Indian history, while Amazon has committed $5bn in capital to its Indian operation." Mukesh Aghi, president of the US-India Strategic Partnership Forum, told the FT that a sudden change in the rules is not helpful. "It sends a message to groups that the environment is not transparent."
Also, the fateful vote on Brexit will take place in the UK House of Parliament today to approve the UK government's agreed withdrawal agreement. However, it looks unlikely to pass, meaning a likely call by Labour for a vote of no confidence in the Prime Minister, which will be averted because the DUP will support the PM in a no confidence vote. One likely outcome is a request to extend the article 50 protocol.
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